Thorntons is a British chocolate company established by Joseph William Thorntons in 1911. Thorntons today has a £ 180 m turnover, nearly owning 400 shops, and an additional 200 franchises. The firm employs 4000 persons.
Firstly the PESTEL analysis is applied to examine the macro-environment, and the Porter’s five forces to analyse the industry environment.Secondly, several analytical tools, showing Thorntons’ strength and weakness are used in order to make a SWOT analysis. In addition, several strategies are suggested in order to enhance Thorntons’ development.
The next diagram explains the link between the several parts of the analysis.
The strategic position of Thorntons
There are many factors in themacro-environment that will affect the decisions of the managers of any organisation. To help analyse these factors we can categorize them using the PESTEL model. By using the PESTEL framework we can analyse the many different factors in a firm's macro environment. This classification distinguishes between Political, Economic, Socio-cultural, technological, Environmental and Legal. Major factors arerelated below.
Political At the national level, there is no major political problem for Thorntons because England is its home market and the confectionery is not an industry which causes problems. The politics about the health can also be mentioned. Indeed, for several years, politics in favour of fruits are developed; those can affect the confectionery market. Indeed, now, some peoplerather buy fruit for snacks than confectionery.
For Thorntons, the industry development is easier in the European Union than in other countries because of a high level of economic integration and of the proximity. The US market is less opened to the foreign firms. Indeed they have a strong protectionist politic. A lot of the UK firms reach the US market by the intermediate of Canada. It’s easierto attempt Canada since the creation of the commonwealth and in North America trade is easier by the NAFTA. The easiest way for a UK firm to attempt the US market is to create a branch in Canada.
Fluctuation of the British pound
From 2004 to 2008, the British pound never stopped growing but since the beginning of 2008 it’s decreasing compared to the $US and the €.The fluctuation of the British pound affects exports and imports. In 1999 Thorntons created its website which is used today for delivery encompassing international delivery. International delivery is available for a lot of countries around the world. Sales and profits are dependant of the British pound rate. In the Thorntons 2007 report Mike Davies, Chief Executive, said that sales online wereincreasing. In 2008, this increase could be faster with the decrease of the British pound.
However, for Thorntons, the imports of raw material will be more expensive. Cocoa price depends on a lot of factors such as the country where it is produced, and the country where it is delivered. Each new contract has its own price.
The majority of boxed chocolates sales are taking place duringChristmas and Easter periods. Thorntons’ website and Thorntons’ cafes provide an economic response to seasonal pattern of demand.
Since the beginning of the subprime crisis, the international economy fell down in recession. Families are aware of this crisis state and are careful about their expenditures. If the recession continues during the next years, families willrather buy useful things than spend in chocolate and confectionary. This hypothesis can be true for day to day expenditures but it can be different when it is a gift matter. Indeed, people will rather buy little things like chocolates or flowers than offer expensive items like MP3 reader or a journey.
The socio-cultural context makes the demand seasonal. Indeed,...