BUS104 Case Study for Assessment Task 2
Palmview Pineapples has been operating on the Sunshine Coast for almost seventy years. Jack Cooper’s father Errol (Errol passed away in 1975) had moved to Palmview from Brisbane at the end of 1946 looking to establish his own farming operation. Errol had been given land options as part of the Federal Government’s Soldier Settlement Program following his military service. He selected 80 hectares and settled on acreage at Palmview. Errol quickly made progress with successful pineapple crops within five years and before long he was expanding into custard apple and passion fruit crops. He was determined to continuously improve productivity on his farm.
Errol had a belief in the 1950s that the Sunshine Coast should be self-sufficient in their food production. He believed in providing enough food for the growing population so that interstate produce was not required and there would be no need for imported produce from overseas. According to Errol, high quality produce was critical for success in achieving this vision. Errol worked hard developing local networks to distribute his produce on the Sunshine Coast and within a few years had grown to the point where he harnessed local connections to transport excess stock to the Rocklea markets in Brisbane. Jack knew his Father was ahead of his time. Jack admired the way Errol developed relationships with other growers in order to share transport costs and overheads, achieving economies of scale to reach bigger markets. At the same time Errol was fine tuning his techniques for planting, irrigation, pruning, yield management and pest control. Errol knew that these factors had to be continually improved in order to leave behind a sustainable business for his children.
From the veranda Jack gazed out across the orchard ignoring the local paper that was laid out in front of him. He was in a reflective mood - he would be turning 65 next year and was wondering when the time would be right for his children to take over the family operation. There had been many changes since 1975. Errol had laid the foundation and Jack had followed the template. Errol and a couple of his mates had established the Sunshine Coast Food Growers Association in 1955. He had served as President, Vice President or in some Board capacity until the end. Jack had continued the legacy, serving the same roles and networking locally, and was a well-known face at the Rocklea Markets – just like his Dad. Jack’s children were at the right age; they had their business degrees from USC and Jacqui had been working at Palmview Pineapples for three years now. Jacqui had completed a Double Major in Management and Accounting and was following in Jack’s footsteps to become the next General Manager – of that there was no doubt.
Jack had mentored his daughter through the past three years and he was proud of the way she approached challenges in the business. When there had been management decisions to be made – such as plant and land allocation choices in specific months, and when harvesting had got out of alignment due to changes in weather patterns – Jacqui would review the factors, look at alternatives, evaluate the best course and make a decision based on reason and logic. This was the way a business should be run according to Jack. This was an extension of the skills and techniques Errol had taught Jack when he learnt the business.
The Custard Apple and Passion Fruit had been a steady alternative crop over the years, but pineapples were the focus of the business as they are more plentiful. Jack was very pleased that his investment in a range of innovative techniques over the past ten years had smoothed out the high and low yield cycles that are common in the pineapple industry. Pineapple harvests had been doing reasonably well meeting annual production targets in two of the past four years, but Jack sensed changes in the environment. The annual target is currently set at 2000 tonnes and while the annual targets had been trending downward since 1985 (3000 tonnes) there had been many factors in play. The supermarket business in Queensland had become increasingly consolidated, new boutique operators had set up on the Sunshine Coast targeting the local ‘organic’ market with high quality product and receiving a premium price; and then there were the cheap overseas imports. This competitive environment was exacerbated by growers from further north in the state working with food processers to supply expanding juice operators. These forces were driving oversupply of product and lower prices at the farm gate for the local producers like Palmview Pineapples.
Palmview Pineapples had produced the following yield in the last four years:
2014/15: 1850 tonnes
2013/14: 1700 tonnes
2012/13: 2000 tonnes
2011/12: 2300 tonnes
Aside from these competitive forces, the challenge as Jack saw things was the increasing cost of maintaining irrigation equipment and managing mealy bugs and root rot in the plants around the orchard. The summer months seemed to be getting hotter and longer, and this was affecting the size and quality of the pineapples. Jack was concerned at the trend of yields and had seen some of his farming neighbours scaling back production due to rotation and harvesting problems. Jack could see they were not focused on key success factors of nutrition management for the soil, correct irrigation techniques and ensuring the pineapple pickers were well trained in contemporary harvesting techniques. The business was fortunate in some ways – there were alternative choices that could be made due to access to capital resources and skilled personnel.
Jacqui’s brother Elias had majored in Marketing and Creative Industries, moving to Sydney and working for Unilever Australasia for the past three years. Elias had worked on the Flora brand and witnessed first-hand the benefits of focused capability in food processing, packaging and marketing. Elias had returned to Palmview Pineapples now and this was making for an interesting dynamic in the family business. Elias had taken on the role of Business Development Manager, and had communicated to his sister and his Dad, his thoughts in regard to the future. Elias felt that in order for the business to grow the question of ‘what business are we in?’ required deeper consideration. Elias had put forward some ideas in regard to developing or expanding into specialty niche markets such as Macadamias or Kiwi Fruit in order to further increase capacity and yield across the growing seasons. Elias agreed with his Father - the competition from cheap imports was driving down prices and impacting on profits of Pineapples. Elias argued that they were relying too much on this revenue stream and failing to act now would lead to catastrophic outcomes in the future.
Elias had other ideas also – he felt there was opportunity for the business to integrate its own processing facilities and develop new diversification initiatives. Elias had spent a couple of summers working at a small craft beer entity in Brisbane – Chester and Kent. Cousins on his Mother’s side, Chris and Jack Young had established Chester & Kent from scratch and Elias had seen first-hand how popular new flavours of beer are in the hospitality market. Elias had done some research and had established that bringing the flavor of pineapples into a craft beer offering is a significant opportunity. In addition to this other regional producers were working with manufacturers to supply pineapple in different formats - in particular supplying the popular juicing franchises on the coast. If Palmview Pineapples implemented a new integrated beverage strategy successfully they could recruit other local growers as part of a local co-operative and a new hospitality destination could be established at Palmview.
And there was one other idea Elias had. Jack did not want to think about this but wondered to himself if it had merit. Elias suggested it may be time to look at other revenue streams to keep the family business viable for decades to come. Elias had handed his Father an insert from the local paper – it was an information evening hosted by The Sunshine Coast City Council and sponsored by a local Real Estate Agent. They were looking for land holders to attend a seminar to hear industry information in regard to local land development opportunities. The basis for this was the establishment of a new high school and town centre close to Palmview Pineapples. Elias thought that a portion of the farm could be developed for townhouse living. It was evident that the local council would be looking to adjust local zoning laws to make this feasible. Elias said that he could be a potential project manager of the residential development and this would future proof the business in the face of threats to the crop production. Jack glanced down at the local paper spotting the phone number to register for the seminar. His hand rested on his phone and he contemplated whether he should call the real estate agent or you as a management consultant to assist in guiding Palmview Pineapples forward to a successful future.
Introduction: Provide a summary diagnosis of the case and stipulate the best way forward for Palmview Pineapples (200 words)
Question One: Using the PESTEL framework provide a table identifying external environmental forces and narrative discussion and analysis on the two most important factors.
Question Two: In terms of group decision making provide an overview of theory and how it applies to this case as related to your suggestion for the best way forward for Palmview Pineapples.
Question Three: Adapt and apply figure 4.2 (p.92) from Robbins et al. (2019) based on the best way forward you have identified as a management consultant for Palmview Pineapples. Utilise Robbins et al. (2019) pp. 92 – 94 to inform your response.
Conclusion: Compare and contrast tactical and strategic planning and explain how they work together in order to drive a successful outcome for Palmview Pineapples (200 words)
Palmview Pineapples was shifted from Brisbane to Sunshine Coast in 1946 by its owner Errol Cooper which he had established in an 80 hectares acreage acquired from Federal Government’s Soldier Settlement Program as a reward for his military service. After Errol passed away in 1975, his son Jack has been looking after the business in a similar manner as his father and achieving annual produce of 3000 tonnes. However, since 1985, Palmview Pineapples has been experiencing a downward trend in its annual production due to the impact of several external environmental factors. Moreover, the competitive market environment and reliance of Palmview Pineapples on a single revenue stream has resulted in several challenges and can lead to catastrophic consequences in the future. In order to save the company’s future in the coming decades, Jack’s daughter, Jacqui and son, Elias has come forward to help out their father in taking some major decisions regarding changes in the company that would help them gain a competitive advantage in the intense market.
As Palmview Pineapples had access to several skilled personnel and capital resources, there were multiple alternative ways through which the business can thrive and achieve sustainability for the coming decades. Expanding into niche markets like Kiwi and Macadamias apart from their pineapple, passion fruit and custard apple would help increase their yield and capacity during the growing seasons. In addition to this, relying on the single revenue stream from selling fruits was not a proper approach for the business. The company can develop its own diversification initiatives through the integration of the processing facilities. Penetrating the beverage market in the hospitality industry through their pineapple flavoured beers and fruit juices would help generate alternative revenue streams. Furthermore, complying with the changes in the local zoning laws by the Sunshine Coast City Council for establishing a town centre and new high school in the area would help out the company during the crop production threats, and Palmview Pineapples should focus on residential development for this new initiative.
|Stable political conditions allow investors to purchase products confidently.||13th largest economy in the world is suitable for businesses requiring capital resources.||A growing population is ideal for large customer bases for businesses.||Australia being a top importer of electrical machinery and equipment, will allow Palmview Pineapples to get access to better farming and irrigation equipment.||The summer months are getting hotter and longer due to climate change as a result of which the quality and size of fruits are affected.||Australia’s fair-trading laws, consumer laws and competition laws are beneficial for both businesses and customers.|
|The changes in business policy by the government are ideal for farming companies.||With a 2% GDP growth rate in 2017, pure investments are the current trend which would help Palmview Pineapples in residential development (OECD 2018).||The supermarket business in Queensland is quite consolidated and local boutique operators are targeting the organic market.||With a $65 billion worth of technological purchases in 2019, companies are able to invest in technologies to meet the increasing customer demands.||Brilliant biodiversity of Australia has attracted visitors from across the world, which is beneficial for its business organisations.||The employment in the country is governed by the Fair Work Act 2009.|
|The local zoning laws are adjusted by the Sunshine Coast City Council to establish residential development through new high school and town centre.||Although the company tax rates are 30%, companies with less than $25 million turnovers have a lower tax bracket (Australian Taxation Office 2018).||Food growers from the north working with food processors and juice operators have resulted in an oversupply of product which has reduced the prices of fruits for local producers.||Advanced brewing techniques in the beverage industry are thriving as a result of which fruit flavoured beers is experiencing demand in the hospitality industry.||Climate change is considered a current and existential national security risk in Australia and might affect food and water quality in the future.||The privacy laws also help business organizations handle the personal information of customers.|
Economic Factors: Being the 13th largest economy in the world, Australia is suitable for businesses requiring capital resources. With a 2% GDP growth rate in 2017, pure investments are the current trend (OECD 2018). This would help Palmview Pineapples in residential development. Although the company tax rates are 30%, companies with less than $25 million turnovers have a lower tax bracket (Australian Taxation Office 2018).
Social Factors: A growing population is ideal for large customer bases for businesses. The supermarket business in Queensland is quite consolidated and local boutique operators are targeting the organic market. Food growers from the north working with food processors and juice operators have resulted in an oversupply of product which has reduced the prices of fruits for local producers.
The functional group decision-making theory is the ideal approach for Palmview Pineapples as it offers an opportunity for a group to make essential business decisions instead of an individual. The consisting primary of four stages, the group making the decisions need to analyse the problem, set a goal, identify alternative solutions and evaluate the best option available (Putnam, Stohl & Baker 2012). Palmview Pineapples is experiencing a similar situation as Jack, Jacqui and Elias need to come together and determine a future alternative approach to ensure a sustainable future for their company. As Jack and his children have different field of expertise, they can offer their respective skill sets and knowledge to determine the best future path for the company. Fruit-flavoured beers being on the rise in the hospitality in industry and having a small craft beer entity in Brisbane established by their cousins. It is ideal for Jack and his children to bring the flavour of pineapples into a craft beer offering. This would not only increase their supply of pineapples but also open up a new separate revenue stream from the beverage industry.
Figure 1: Information Resources Flowchart
(Source: Robbins et al. 2015)
As the best way forward for Palmview Pineapples is entering the beverage industry in the hospitality sector through their pineapple-flavoured beer, the above-mentioned Information Resource Flowchart might be used to determine the viability of the chosen approach. As the first stage, it is necessary to gather further background information on the topic (Robbins et al. 2015). Elias has already worked in the small craft beer company Chester and Kent for 2 years and has experience about how much popular new flavour beers are in the hospitality market. He has also done some primary research on how to bring the flavour of pineapple into a craft beer. However, further research is needed about modern brewing techniques to make the new beer taste good for the customers. In the second stage, both academic and non-academic types of research can be conducted on necessary equipment, machinery and techniques to penetrate a new market with better brewing techniques. In the third and final stage, library databases can be consulted for profitable business ideas on how to develop a sustainable business in a new market or industry.
Both tactical and strategic planning is necessary in the context of Palmview Pineapples in order to achieve a successful outcome. Whereas tactics are necessary for achieving a specific objective through planned actions, the strategy is necessary for a long-term organizational goal and destination. Strategic planning is necessary for activities that would lead to company differentiation, while tactical planning is necessary to determine how the strategy can be executed. Action plan forms the basis of strategic planning, while tactical planning includes the actions required for executing the action plan. (Esmaeilikia et al. 2016)The strategic planning of the company would help the company gain a competitive advantage in the market, while tactical planning is necessary for preventing any failure of goals. Tactics are more focused on the task while strategy fulfils the purpose of the chosen plan. Due to the short-term nature of tactical planning, it is quite flexible, whereas a fixed company strategy has fewer flexible opportunities. Tactical planning is more oriented towards present conditions, whereas strategic planning is future-oriented. The strategic planning for Palmview Pineapples includes opening alternative revenue streams by penetrating the beverage industry in the hospitality market through pineapple-flavoured beer. The tactical planning is necessary during each stage, starting from brewing techniques to market entry and networking decisions. With a combination of the two, a successful outcome can be achieved by the company.