An Overview
Success in most organizations is attributed to management’s ability to develop strategies for surviving in a dynamic business environment. Unifine Richardson, a manufacturer of salad dressings, ice cream toppings, sauces, and syrups, is an example of a firm that operates in a constantly changing setting. In April 2002, the company’s purchasing manager, Rob Pincombe, was notified of new developments in import rules, which would adversely affect its Chinese honey inventory. In addition, the enterprise would have to incur higher operating costs because raw materials prices were expected to escalate in the global market. An analysis of the Unifine Richardson case reveals that despite the existing supply chain, political, technological, and legal related threats, the firm can rely on several alternatives, such as sourcing raw materials from the local market, to thrive in the manufacturing industry.
Situational Evaluation (SWOT Analysis)
The Strengths
One factor distinguishing Unifine Richardson from competitors is its loyal customer base. The company sells 80% of its honey to one large franchise, which uses the product as a dipping sauce for its menus (Prahinski, 2019). The rest of the merchandise is distributed to other existing and new operators. The firm can attract and retain clients by consistently meeting their demands. Therefore, news about the shortage of raw materials is a source of concern for the purchasing manager.
The Weaknesses
The company’s major weakness is based on the supply chain. Unifine Richardson purchases raw materials from a single-source supplier, Harrington Honey (Prahinski, 2019). The practice may significantly affect the company’s operations, especially when the broker cannot satisfy the establishment’s demand. In addition, Unifine Richardson relies solely on imports from two states, China and Argentina. While Canada, the firm’s domestic country, was a major honey producer in 2001, the firm still preferred to use a Chinese-Argentinian blend (Prahinski, 2019). The corporation’s limited supply chain adversely affects production, particularly when the distributor cannot acquire the preferred type of honey from the two countries.
The Opportunities
Unifine Richardson has multiple opportunities at its disposal. The management can take advantage of existing international influence to import honey from other countries, such as the United States. Alternatively, the firm can purchase unpasteurized honey directly from beekeepers in Canada. Besides, the organization has several combined options to choose from. For instance, the company can sell pure Canadian or U.S. honey to consumers who do not prefer the Canadian-Argentinean blend. The corporation can invest in such opportunities to satisfy its existing customer base and meet new demands in the industry.
The Threats
Just like other small and large organizations in the manufacturing sector, Unifine Richardson also faces several external challenges. For instance, the firm is greatly affected by changes in the legal environment. In March 2002, the Canadian Food Inspection Agency (CFIA) reinforced importation regulations for bulk honey from China and Argentina, Richardson’s primary source of honey (Prahinski, 2019). CFIA took this measure after chloramphenicol, an antibiotic that causes aplastic anemia, was traced in a honey shipment (Prahinski, 2019). Such rules, which are beyond the company’s control, can drastically affect its operations because the firm heavily relies on imported raw materials.
Political changes also have the potential to harm the organization. Political-related attacks against products from China, one of the dominant producers of honey in the world, are evident. For instance, CFIA detains merchandise from Greece and China for laboratory testing but allows Argentinean honey, which may be subject to adulteration, to be released before the reception of lab results (Prahinski, 2019). In addition, the United States imposed an anti-dumping tariff on honey from China and Argentina to prevent re-exportation to the country (Prahinski, 2019). While such policies are essential to facilitate the consumption of safe animal products in Canada, they affect the supply of honey, which is Richardson’s primary raw material.
Technology is also a source of threat to the company’s operation. The Canadian government earlier lacked the equipment to trace chloramphenicol in honey. However, technological advancement in the country enabled CFIA to develop an effective way of identifying drug traces. As a result, illegal residue limits of over 0.001 parts per million (ppm) were detected in the Chinese shipment (Prahinski, 2019). This technological breakthrough greatly hinders the company’s activities.
Economic changes also adversely affect the organization. Often, market forces of demand and supply determine product prices. For instance, high demand and low supply of merchandise are likely to increase operating expenses. Correspondingly, Richardson is expected to pay higher charges for similar quantities of honey. Initially, the firm paid $1.08 per pound for a 50-50 blend of Chinese and Canadian honey (Prahinski, 2019). With the new market shifts, the company will pay $1.75, $1.10, and $1.42 for 100% pure Canadian honey, 100% U.S. honey, and 50-50 Canadian-Argentina honey, respectively (Prahinski, 2019). The forecasted price changes will increase the company’s overall expenditure.
The Alternatives
One of the possible solutions that the enterprise can adopt to facilitate its operations includes purchasing honey from other exporters, such as the United States, Greece, Turkey, Mexico, Ukraine, and India. Based on information from the article, the United States was the second-largest international honey producer, with approximately 0.1 million tons in 2001 (Prahinski, 2019). Therefore, the U.S. market can satisfy Richardson’s demand for 1 million pounds of honey annually. Besides, the absence of legal measures against imported raw materials from the country is a significant advantage. However, if the firm chooses to source its products from the United States, it should develop strategies for dealing with fluctuating global market prices.
Alternatively, the company may purchase honey from the local Canadian market. In 2001, Canada was the 10th largest honey producer across the globe (Prahinski, 2019). Such figures indicate that the corporation has the potential to satisfy the growing demand for honey. However, Unifine Richardson may incur huge expenses since Canadian honey costs higher than pure U.S. and Canadian-Argentina blends.
Recommendations for Future Growth
Unifine Richardson should enter into a long-term contract with honey suppliers from Canadian beekeepers. By adopting this new strategy, the firm could avoid issues of inadequate supply arising from political changes. Besides, the company would be assured of quality raw materials since no cases of honey contamination in Canada were confirmed. However, Unifine Richardson should be financially ready to increase its budget to cater to the additional material costs. Such initiatives will enable the organization to have a consistent flow of resources and retain the customer base.
Overall, Unifine Richardson faces both internal and external challenges affecting its market position. The firm has several opportunities to facilitate its operations in the manufacturing industry, such as taking advantage of globalization. Despite having a loyal customer base, the company experiences supply chain, political, technological, and legal-related threats. To overcome some of these challenges, the establishment should source raw materials from the local market. However, the firm should also be willing to increase its annual expenditure.
References
Prahinski, C. (2019). Unifine Richardson. Richard Ivey School of Business, 1-5.
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