Configuración de las antenas halo

Standard Foods Taiwan Ltd. (Standard) was originally an American-invested company. The company lost a lot of money in the first few years. The mother company decided to finish its operations in Taiwan. Mr. William Cheng, Director of Operations, said, “Our Chairman, Mr. D. F. Tsaur, after getting his Ph.D. from the USA, was employed as plant manager. Because of the company’s big loss, the American marketing manager left the company and then the general manager also left. Mr. Tsaur succeeded as marketing manager and then general manager of the company. Quaker Foods Corporation (USA) decided to withdraw its investment from Taiwan in 1986. Mr. Tsaur made his decision to take over the company and reorganise it, and he became the chairman of the company.” A few years after taking over, the company turned profitable and has now developed to be the most profitable food manufacturing company in Taiwan.

Mow does a company achieve a turnaround from loss to high profitability while most food manufacturing companies arc in a low profit state? The following sections

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will state Standard’s top managers’ thinking about market orientation, their perceptions o f change in the business environment, the actions they have taken in response to the changes, and their business philosophy and Standard’s performance.

Standard Foods Taiwan Ltd. (Standard) has achieved a remarkable turnaround from loss under its American mother company (when the Taiwan food market was dominated by Nestle) to high profitability as an independent company under Taiwanese management. Its success has been based on very effective product positioning, market segmentation, marketing technology, an integrated marketing orientation and the creation of competitive advantage. The company has aimed to produce high-quality and high-price healthy products and to position those products clearly so that all units and departments have a very clear direction to follow. Intra­ firm communication thus becomes easier and more co-operative, and resources are used more efficiently. This emphasis on product positioning reflects a strong market orientation, with an emphasis on customers’ needs. The emphasis on high quality means that the quality assurance function is very important within the company. (Standard’s QA system was originally adapted from Quaker, the American mother company.)

One of the most impressive features of Standard’s operations is the way in which the most advanced marketing knowledge has been disseminated throughout the company, not just the marketing department. For example, it has expanded the meaning of customer satisfaction from the external customers to the internal customers within and between departments. For these reasons, the company can be classified as having a fully integrated marketing orientation. In order to identify customers’ needs, Standard places a lot of emphasis on SWOT analysis and the value of consumer surveys. Mr. Billy Yang, General Manager, said: “We had many

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consumer tests with different test methods. We found big differences in consumer behaviour and consumer habits in different areas, no matter what kind of test instrument we used. Consumer behaviour in different areas of Taiwan is different. Consumer behaviour in different areas of Mainland China is also very different”. (Ref. A.3.1.2) Thus there is an emphasis on local markets, local economies and the needs of local customers. This presents a challenge for the company’s production system, since there is a need to produce different kinds of products to satisfy a wide range of tastes. It is also recognised that new products must be introduced into new markets at the right time. The main need is to actually get to know the consumers in each area, e.g. through face-to-face interviews and panel discussions. As Mr. Yang stressed: “You may not make the right decision if you read only the report produced by the marketing department or by an appointed survey company ... Sometimes I attend the panel discussion with the consumers the whole day. Or sometimes I take part in two panel discussions instead of four during one whole day ... I feel that it is much better and more direct to be in the panel discussion than rely only on what is in the report”. (Ref. A.3.1.2) Consumer tests and SWOT analysis enable the company to position products accurately. As Mr. Billy Yang, General Manager, stated, this include “the development direction, the price o f the product ... sales strategy and a lot of other matters ... I would like to say integrated marketing orientation instead of just market orientation”. (Ref. A.3.1.11)

Top managers in the company identified four major aspects of business environment change which were o f particular significance: the improvement in living standards resulting from Taiwan’s high economic growth and increasing GNP; the accompanying increase in demand for consumer goods; changes in purchasing behaviour associated with the introduction of a new retailing system; and people’s

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growing concern with the quality of their lives and health as a result of higher living standards. Standard has successfully responded to these developments in the business environment by focusing on providing customers with the products they want and making them available through the various new retailing channels which have emerged as a result of the importation of European, American and Japanese management styles, and are illustrated by the spread of convenience stores, supermarkets and hyper stores. The company has exploited the advantages of Taiwan’s new retailing system: its sales have grown as the new channels have developed. As a new company, Standard did not originally have its own sales channel. This was in some ways a problem, but it also meant that Standard subsequently found it easier to switch from traditional to modem sales channels such as the MGE (military, government and education) sales channel. As Mr. William Cheng, the Director of Operations, said: “The sales revenue increased after entering the MGE retailing sales channel. And we have more cash to reinforce our advertising. We put our efforts into R&D. Therefore, we have more good products to enforce our product line”. (Ref. A.3.2.5) It should be added, however, that the continuing change in sales channels in Taiwan may become destabilising, since the retail market is increasingly oligopolistic and will be dominated by just a few retailing groups in the future. Thus Standard’s top managers predict that there will be enormous pressure on all suppliers, and a price war will develop, reducing the profits o f the suppliers. (Ref. A.3.2.3) This will present an enormous challenge to Standard.

For Standard, high growth and high profits (in the long term) have in the past been seen as the main targets of the company, and all managers have been expected to commit themselves to these targets, thus ensuring a high degree of inter-functional co­ ordination. In this respect, the company’s underlying business philosophy has

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remained the same and has been a source of inspiration to all employees. That philosophy has usually been expressed as “Stability, Growth, Customer Satisfaction, and the Pursuit of Excellence” and in the slogan “One step leaves one footprint” (meaning that the philosophy must be implemented effectively step by step - working steadily, one makes progress). High growth and high profits have enabled the company to put more resources into employees’ education and training, and into stimulating employees to work hard towards implementing the company’s philosophy and thereby achieving a competitive advantage. High investment has also been possible in R&D, engineering and advertising. A virtuous circle has thus been formed, rooted in a strong corporate culture. At times, the various elements of the business philosophy have conflicted, e.g. Stability versus Growth, but top managers have been able to resolve such conflict. Most importantly, Standard’s business philosophy has been implemented consistently and effectively throughout the company. This is largely because top managers have themselves been promoted within the company because they have demonstrated their understanding of, and commitment to, Standard’s business philosophy. Also, as Mr. William Cheng, Director of Operations, put it: “Our company emphasises the moral fortitude of our employees, for example, loyalty, no corruption, and no cheating”. (Ref. A.3.3.2)

Recently, Standard has also expanded into the mainland China market as a result of the changing business environment. However, because China’s living standards are lower than those in Taiwan, the company has not been able to attain high gross profit margins. It has been necessary to maintain prices at levels which are acceptable to customers in mainland China. This is another example of a strong market orientation. As Mr. Billy Yang, General Manager, said: “The management in Mainland China is different from that of Taiwan. The consideration is not only the gross margin but also

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the quantity and price position of the product. Actually, you need to see what is the position of your product in a lower, medium or higher price position: you don’t need to have your product in a higher price position. Everything starts from the consideration of cost (price). If you have your price higher than the acceptable level for the consumers, you can hardly sell it”. (Ref. A.3.3.3) Also, expansion into mainland China requires a different production system from that created for Taiwan, since, as Mr. Yang said, in China, “The production volume of plants may not be enough for the market if one of the products is successful in the market. It may need more quantities by adding a second factory and a third to offer the quantity to meet market demand. In other words, a massive production system is needed ... In Taiwan, we emphasise the flexibility of our production line to produce goods to fit the requirements of marketing. But in Mainland China what we need is an economic production, but not flexibility”. (Ref. A.3.1.5) Hence, a lot of responsibility is placed on Standard’s engineering team.

Interestingly, although the company’s performance is superior in all respects, the top managers, in their self-rating of marketing performance (using Philip Kotler’s instrument: see Appendix), describe it only as very good4 (Standard’s average score is 24.75). They believe they actually need to work harder in the pursuit o f excellence, thus abiding by the principle of “One step leaves one footprint”. They are particular worried about the negative impact of such future trends as the increase in transportation costs and the oligopolistic nature of the sales channel market. The revenues, net income and net income per share of the company for 1990-1995 are shown in Table 4.4.1, and the sales growth of Standard is shown in Figure 4.4.1.

' The total score is somewhat between 0 and 30. That the score between 21 and 25 shows ‘very good’ on the level of marketing effectiveness.

113 Table 4.4.1 Standard’s performance

Year5 Revenues from operations (in million NTS dollars) Net income (in million NTS dollars) Net income per share (NTS dollars) ROE (%) ROA (%) 1990 1,015 102 3.89 25.36 14.39 1991 1,529 233 6.54 39.56 23.16 1992 2,135 330 5.83 36.92 25.94 1993 2,250 423 5.40 33.22 26.70 1994 2,678 461 4.31 27.71 23.34 1995 3,118 574 3.96 27.20 21.85 Source: Standard

Figure 4.4.1 Sales growth of Standard

unit: NTS million

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Sources: Standard

The fiscal year of Standard is from 1st July to the following 30th June. This is different from that of other cases (normally from 1 st January to 31 st December).

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