In September 2003 Thorntons, the Uk’s largest manufacturer and retailer of specialist chocolates, completed a three-year planning period aimed at achieving a turnaround in the company’s performance. While company turnover had been increased to £167m (= €250m) providing Thorntons with an 8 percent share of its core market, boxed chocolates, profit after tax had declined to the lowest level for seven years (Exhibit 1). During that time Thorntons had set out to follow a series of strategic initiatives involving the reorientation of the company towards becoming a retail-focused business, increasing the scale of the company’s manufacturing and retailing operations and developments that would…show more content…
The demand for Thorntons boxed chocolates follows a strongly seasonal pattern: 35 percent of sales are in the seven-week period before Christmas, a further 10 percent are for Easter, including three million Easter eggs. The combination of providing a fresh product together with the need to meet a seasonal pattern of demand places particular pressures upon the company’s manufacturing facilities. A proportion of the Christmas product is produced several months in advance, maintaining freshness through chilled storage. However, Thorntons chocolates are enrobed in chocolate, rather than moulded. Their hand-made appearance makes the process of packing boxed chocolates less open to automation than is the case for moulded chocolates (with their more uniform shape an size) produced by companies such as Cadburys. The seasonal demand for packing staff requires the increased use of casual workers, with consequent falls in efficiency. Seasonal demand also requires the use of temporary staff in the retail outlets to meet a sales pattern that can within a few days increase tenfold; typically the company sells £10m of chocolate in the last 72 hours of Christmas trading. At times the company has sold icecream (self-manufactured or bought in) as an attempt to offset the effect of low, off-season, chocolate sales.
In certain respects Thorntons’ strategy, with its