This MBA thesis is my final assignment before obtaining my MBA degree in General Management, at the Nationale Handels Academie (NHA) in association with the Management School in Paris (IPE). The main subject of this thesis is whether Makro Christmas Hampers implemented their Value Creation Process in an optimal way?
The main purpose of this thesis was to investigate whether the company left possibilities unused during their reorganization. This thesis therefore starts with describing the reason why VCP is created and what the companies objectives where within their new strategy. Within the sections, the companies and their industry will be evaluated in order to find out whether the implementation went in an optimal way.
This thesis is based on different sources, which are mentioned within my references. The results of these sources are compared with the literature which is mentioned within the references. The results of my research are based on these comparison, and evaluative studies about the company and their industry. Because of the short time between the implementation of the last level of VCP (2017) and my study, the results (so far) can be misleading. Therefore my study is aimed at the fundamentals which need to ensure that VCP is implemented in an optimal way.
There were some similarities between the literature and the content of VCP. The companies' market orientation is one of them. The companies' market orientation changed the companies' structure as well as their culture. These changes were processed in order to compete on differentiation, instead of price. This price competition lead the company into a situation in which their ebit was heavily under pressure. Comparing the literature to other parts of this research, namely their innovation level, the companies' full focus on innovation is in question. The company has new products and services within their range, but research shows that not all of them reach the same innovation level. This study shows still levels of improvement within certain fields. These levels are not in line with the conditions described within the literature, and create an extra challenge for the company in order to reach an optimal level of their VCP.
With 90 permanent employees and more than 500 seasonal workers, the company produces more than 1.5 million Makro Christmas Gifts Christmas gifts each year and serves more than a quarter of the Dutch Christmas gifts industry. This makes Makro Christmas Hampers the undisputed market leader within the industry. The companies' customers are served from one of the 16 showrooms. These showrooms are located within the Makro Cash& Carry stores. Except two of them, Showroom Venlo and Zwolle these are the so called ‘stand-alones'. These two showrooms are located within an industrial area, but not within the Cash& Carry concept stores. In 2016, the company implemented reorganization in order to stop competing on price. The companies' previous used price strategy was the reason the companies margins were under high pressure.
2.1 Unused possibilities
A company can go through reorganization for various reasons. Makro Christmas Hampers, as a part of Makro Netherlands wanted to improve their efficiency, keep or strengthening their position as market leader and to be better prepared for the future. To support the new strategy, this reorganization changed the companies' structure as well. By repositioning the company like this, the question arises whether the company left no possibilities unused.
2.2 Adapting the strategy
In the end of the year 2015, Makro Christmas Hampers realized a turnover of €38 million. This resulted in a market share of 33% (appendix 1) within the market of Christmas gifts. In this highly competitive market they sold nearly 1.4 million Christmas Hampers in one year. Because of these numbers, Makro Christmas Hampers was market leader within this market. Makro Christmas Hampers was followed by Sligro, who had (in the same year) a market share of 21%.
Makro Christmas Hampers wanted to enlarge this Market share and approached the market with a new strategy, called VCP. This strategy changed a lot within the company. First of all, the company got a new structure to ensure that the company was able to react better towards their circumstances, more efficiently, and much more marketing minded than before. The marketing department got a stronger influence in the companies' operational aspects. The extra value which is created by this new VCP strategy is mainly coming from the marketing departments' influences. The company increased their perceived value (Valarie A. Zeithaml, 1988), by new created products and services after the implementation of VCP.
2.3 Preliminary research
In order to create the right content for VCP, Makro Christmas Hampers studied the markets as well as their own organisation to create the right completion of VCP. The companies' research existed of field research as well as the study of their own organisation, before they finally created VCP.
The organisation went from a project minded organization to a more market minded organization. This resulted among other things in the elimination of the project manager within Makro Christmas Hampers headquarters, the creation of a new department called ‘Fulfilment' and centralizing the main part of the financial departments into a central spot within Makro Netherlands. These organizational changes made the company work more efficiently and eventually with 1,3 less FTE's than before VCP (appendix 2).
To increase their market share of 33%, and to reinforce their market position, the company changed their strategy. This resulted in new services like BBQ's and Christmas events, which will be further explained during my research models further on. Within this strategy they were no longer competing on price, but competed on ‘customer experience'. Which in the end should resulted in more profit, because of the higher margins which come with these offered services. Makro Christmas Hampers new strategy will be further evaluated and analysed during this thesis.
During my research on VCP, I could not find any numerical targets which were linked to the new strategy. Makro Christmas Hampers had linked two general targets to VCP, but these were not linked with any time trial. According to the documentation which the company provided to the Works Council and the data which is communicated to the unions, the company had two goals which had to be realized for the future:
• Strengthen their position as market leader by increasing there market share
• Focus on commercial activities to stay innovative
Because the company did not link any time trial in order to realize these targets, it will be hard to measure whether these results are accomplished or not. Therefore will the results of these targets probably not be measurable within the period between 2015 and 2017. The results of such a drastic change in strategy will need time to prove themselves.
Therefore will my research not be aimed at the end results like turnover or market share, but at the underlying values, which should be the fundamentals for realizing the above targets. In other words, did Makro Christmas Hampers implement VCP in an optimal way, or did it left possibilities unused, in order to reach the above goals. Optimal stand for; ‘being the best or of the greatest value, sometimes under certain parameters or restrictions (businessdictionary.com, 2017)'. For more detailed information about the optimal way, see section 5.2
My study will use measure points like market share and customer loyalty, but more as an indication of how far the company is in their new strategy instead of fully rely on the end result. The result of my research will declare whether the company used all the possibilities within their power, to turn VCP into a success!
This thesis exists of three stages (figure 1). The first one is a theoretical stage, in this stage I describe the methodology which I plan to use in my research. The second stage is the research stage and starts with my approach and accountability, which will be supported by the different research models in the appendices. Stage three is my last stage and will be used to write my conclusions. My last stage (conclusion) will be used to describe whether Makro Christmas Hampers used their VCP in an optimal way? In other words, my research topic will be answered.
3.1 Theoretical part.
Within the theoretical part I will discuss the structure and the methodology which I used during the rest of my research.
3.2 Research part
After finishing the theoretical part in the end of section 4, my research will start in section 5. This part of my research will be mainly descriptive ‘The purpose of descriptive research is to gain an accurate profile of events, persons or situations. (Saunders, Lewis & Thornhill, 1997)'. First VCP and the topic of this study will be described and studied. And additionally in section 6, Makro Christmas Hampers goals and expectations of VCP are the variables to be studied.
Descriptive and explanatory research
The research questions described within my action plan largely correspond to my research. Some questions are added, but if it happened, it's always mentioned. The mainly descriptive and explanatory (section 5 and 6) studies provided me of enough data, that will be used as a guide during the rest of me research, and during the use of different research models in section 7. The use of the previous mentioned purposes in section 5 and 6, can not completely excluded other studies.
To meet my objective and to further collect the right data for my research, the following topic will be of help; Did Makro Christmas Hampers used their “Value Creation Process” in an optimal way? To further address this research question it is very important to analyse it first. Therefore further divided the question into two sub question:
• One could ask what value is.
• And what is optimal?
Value and optimal are within this research in direct connection with the companies competitive advantages. Therefore I added the companies' competitive advantages into my research.
• Competitive advantages
To further address this research in the right direction and collect enough useful data, I used the following part questions for my research. According to these part questions the next step of my research will be processed.
• What was the reason to create VCP?
• Who is influenced by VCP within Makro Christmas Hampers?
• VCP and Makro Christmas Hampers Stakeholders.
• Why is it a problem, when VCP is not optimal used?
In order to differentiate the question into more specific questions, I differentiated the question ‘who is involved (action plan)?' Into ‘Who is influenced by VCP within Makro Christmas Hampers?' and ‘VCP and Makro Christmas Hampers Stakeholders'
After finishing section 6, I will continue my research in section 7, by using a mainly evaluative approach. The main intention of this part of my research is to evaluate the companies' results, in order to find out whether the company implemented VCP in an optimal way. This evaluative character will carry on during the rest of my thesis in order to discover any shortcomings of VCP. Besides the fact that the character of this part of my research is mainly evaluative, other research models are not excluded within this part of my research. The cause and effects between VCP and Makro Christmas Hampers, for example will also be discussed. This latter approach is reflected in the relation between the variables being compared. The research models which are used, are the SWOT analysis (including the confrontation matrix), Ansoffs (1957) Growth Model (Ansoff, 1957) and Porters (1980) Five Forces Model. In order to collect and process the right data, these models will be supported by other research models like John Elkington's (1994) Triple Bottom Line. Each research part will be closed off with a sub-conclusion. Within this sub-conclusion the processed research results will be summarized, and subjects which need extra attention within the next research model will be mentioned.
In section 10 all my research results will be collected and processed into my conclusion. Within this conclusion it will become clear whether the companies VCP, was optimal used or not?
My research approach will not only influence the shape of my thesis, but also the data collection, and how I analysed it. Within the methodology section I like to describe which procedures and working methods I used in order to collect and describe my research results. This methodology describes the way I have done things during my research and while I wrote my thesis.
Compared to the methodology described within my action plan, I made some adoptions within the methodology. If there is adapted content, I have always mentioned it within the description.
4.1 Inductive and deductive approach
‘There are two common alternative ways of relating theory to reality, which are the deductive and inductive approach. Where you wish to adopt a clear theoretical position that you will test through the collection of data, your research project will be theory driven and you will be using a deductive approach. Where you wish to explore a topic and develop a theoretical explanation as the data are collected and analysed, your research project will be data driven and you will be adapting an inductive approach (Sanders, Lewis & Thornhill, 1997).'
Compared to the approach described within my action plan, I made some adaptions. By combining both the inductive-, and deductive approach, both approaches complement each other in order to come to my conclusions. The challenge of the inductive approach within this study is the fact that this approach is not resistant to unexpected events. This could have influences on the results of my research. Therefore will the inductive part of my approach assume that the companies' future will look like their past. This off course is not a certainty, and could influence the goals results in my conclusion if different.
4.2 Quantitative versus Qualitative research
‘There can be little doubt that research that involves the integration of quantitative and qualitative research has become increasingly common in recent years. While some writers express unease about the ‘whatever works' position that underpins it (e.g. Buchanan, 1992; Pawson and Tilly, 1997)', so far as research practice is concerned, combining quantitative and qualitative research has become unexceptional and unremarkable in recent years. For my internal as well as the external research of Makro Christmas Hampers it is important to do quantitative as well as qualitative research.
When searching for stakeholders' satisfaction a quantitative research method like a questionnaire would be in place. When collecting data to review the implementation of VCP, qualitative research methods like in-depth interviews are more common.
So, although these are two different research approaches, it is also possible to combining them, which is often seen as a better advantage way, to draw conclusions on a research. By using both research methods I realize data numerical data as well as socially constructed data. This combination realizes a strong foundation for my further research. ‘In the field of evaluation research, and indeed in several others applied fields, the case for a multi-strategy research approach seems to have acquired especially strong support (Tashakkori and Teddlie, 2003).'
4.3 Data collection
There are two types of data which can be used for gathering data. These two types are primary and secondary data. Primary data can be collected either through observation or through direct communication with respondents. And secondary data can be collected from existing sources. By implementing how to obtain data to answer my research questions, I used both of these data collections. Therefore this thesis will be based on both primary data and secondary data.
4.3.1 Secondary data.
‘There are several benefits of using already obtained data. One of them is time gain. Data which is already obtained can be further analysed to provide additional knowledge. Because collected secondary data, was in the first place collected for some other purpose (Saunders, Lewis& Thornhill 1997)'.
‘Secondary data can be further analysed to provide additional or different knowledge, interpretations or conclusions (Saunders, Lewis& Thornhill 1997)'. The secondary data which is used during this research is intended for gathering knowledge, interpretations and in the end for my conclusions.
4.3.2 Primary data.
‘Primary data is collected specifically for the research project being undertaken Saunders, Lewis& Thornhill, 1997)' I collected my primary data mainly by different sorts of interviews, which were aimed at the companies' internal and external surroundings.
4.3.3 Recognize the purpose of my research.
‘Research can be designed to fulfil either an exploratory, descriptive, explanatory or evaluative purpose or some combination of these. The emphasis in explanatory research is to study a situation or a problem in order to explain the relationships between variables (Saunders, Lewis & Thornhill, 1997)'.
My research exists of combined studies (Saunders, Lewis& Thornhill, 1997). Which will be dominated by explanatory and evaluative studies, besides that, other studies are not excluded. The focus during the explanatory studies will be on the relationship between the variables. The focus during the evaluative part of my study will be on finding out whether their new strategy works. ‘The purpose of evaluative research is to find out how well something works (Saunders, Lewis & Thornhill, 1997).' The results of this will be discussed during my sub-, and eventually end conclusion in sector 10.
Within my end conclusion in section 10, I describe whether there are still points of improvement for the companies within their new strategy.
4.3.4 VCP data
For obtaining information about VCP, I mainly used secondary data. This is mainly data which was used in the first place to communicate between the works council, unions and employees. This secondary data is added with the data which I collected through in-depth interviews.
The relevance of the research of my thesis can be divided into a business and an industrial relevance. Below I described these two components and give a clear view of their attentions.
4.4.1 Scientific relevance
The scientific relevance of this research is that I processed the collected data through three different research methods, namely; the SWOT analysis (including the confrontation matrix), Ansoffs (1957) Growth Model and Porters (1980) Five Forces Model. I further collect and process these data results into my conclusions, in which I will determine whether Makro Christmas Hampers used their VCP in an optimal way.
4.4.2 Business relevance
For Makro Christmas Hampers this research is relevant because it shows whether or not the company used their VCP in an optimal way. After this research it will be clear for the company whether there are still possibilities left unused during there reorganisation.
The quality of the data throughout my thesis should be secured of a high reliability,
because of this high reliability I can declare that my thesis is made without any plagiarism. A part of the collected data is gathered from primary sources, these provided information which was already available. The other part of the data is gathered from secondary sources. This part of the data is collected by me with great caution, to provide truthful data. I can therefore declare that this thesis is free from plagiarism.
5. Did Makro Christmas Hampers used their “Value Creation Process” in an optimal way?
‘The research question is the key question that the research process will address, or one of the key questions that it will address. The research question is generally the precursor of research objectives (Saunders, Lewis& Thornhill, 1997).'
In order to find out if Makro Christmas Hampers used their VCP in an optimal way, it was of importance to analyse VCP and their expectations within Makro Christmas Hampers. ‘The purpose of descriptive research is to gain an accurate profile of events, persons or situations. Descriptive research may be an extension of a piece of exploratory research or a forerunner to a piece of explanatory research (Saunders, Lewis& Thornhill, 1997)'. Within this study it's used as a forerunner to a piece of explanatory research in the next section. This will be followed by an evaluative part which starts in section 7 will determine whether VCP left any possibilities unused.
As discussed during my action plan (appendix 3), I used secondary data as well as in-depth interviews with the entire management group called, Census (appendix 4) to collect the data for this part of my thesis. The data collected for this part of my research is mainly collected through secondary data and added with a less amount of data which is collected through in-depth interviews. The data which is collected for the part questions within the next section is mainly based on the in-depth interviews and added with secondary data. Because the function of commercial manager is not fulfilled yet, the management team exists of 3 persons, which all responded (references) to my question to participate on my in depth interviews. The content of my in-depth interview is adapted a little bit, in order to collect more detailed information about the goals of VCP for the internal situation (appendix 5). When further changes which have been made compared to my action plan, i've always mentioned it.
After the first results of my research it has become clear that Makro Christmas Hampers wanted to act in a more market oriented way. VCP was in this way a cause' to realize optimal effects. Because of this, it is of importance for this research to first determine the content of ‘value' and ‘optimal'.
According to Valerie Zeithaml; ‘The perceived value is the consumer's overall assessment of the utility of a product based on perceptions of what is received and what is given (Valarie A. Zeithaml, 1988)'.
The Value which Makro Christmas Hampers is talking about is the value which they can add to the production process themselves. The company decides to create distinctive products and services by adding more value to them. Value of which they knew their customers were paying much attention to.
5.1.1 Monetary value
The monetary value within this thesis stands for the value expressed in money. This value and the companies connected turnover are one of the main issues for a company to survive.
By creating products and services with a higher value for their customers the company added ‘emotional' value to their new introduced products, this will be further explained within the section ‘Non-monetary value' below. By adding this emotional value to their products, the company created products and services in which their customers were willing to pay more (monetary value).
5.1.2 Non-monetary value
Value can also have an emotional or non-monetary value, as well. Emotional value is what Makro Christmas Hampers called ‘their customer experience'. On this ‘customer experience' is no price attached. This emotional value can exist within offering the customer a high level of customized products and services, or taking their customers into a journey where atmosphere plays an important role. An example of this latter option is the way Makro Christmas Hampers wants to profile themselves with Christmas Market events... The company takes their customers through this ‘customer experience' as a sort of extra effort, which is adding value to their products. Eventually, thanks to these extra additions, the company expects that customers are willing to pay more for their services, which in the end supports the companies' monetary value as well. This customer experience supposed to increase the perceived value of their range of products and services.
Now that value is discussed, optimal is on turn. ‘Optimal stands for being the best or of the greatest value, sometimes under certain parameters or restrictions (businessdictionary.com, 2017)'. Within this research, being of the greatest value stands for, leaving no potential opportunities unused during the creation and later on during the use of VCP within Makro Christmas Hampers. This will be mainly analysed and discussed during three research models.
5.3 Competitive advantage by VCP
The companies' competitive advantage is not included within my action plan. The reason I added this section to my research is to describe the companies' competitive ambitions with VCP.
Makro Christmas Hampers VCP, created a differentiation strategy (appendix 6) based on different products as well as on a better customer relationship. The old strategy in which they were competing on price (costs) was because of the low margins on the end of its lifetime.
Figure 2 shows a typology of the basic (generic) competitive strategies (Homburg, Kuester& Krohmer, 2013)'.
Sources: Homburg, Kuester& Krohmer, 2013
5.4 The profile
This mainly descriptive part of my study describes the content of the topic and serves as a forerunner to the explanatory research within the next section. ‘This has to been done because it is necessary to have a clear picture of the phenomenon on which you which to collect data prior to the collection of the data (Saunders, Lewis and Thornhill, 1997).
To determine the influences of VCP to the company, it is important to determine what value is and what is optimal in this context. This first section determined these two concepts in relation to Makro Christmas Hampers. As a result of their market orientation the company stopped competing on price, and start competing on differentiation. With customized products, services and exclusive product lines.
So far, VCP and their first influences to Makro Christmas Hampers have been described. Within this section and the following one, the relationship between VCP and their goals have been discussed. These goals are mainly aimed at adding value for their customers and in line with that, Makro Christmas Hampers. Out of these first results has become clear that the companies intentions of VCP, where to act in a more market oriented way. The part questions within the next section of my research will be aimed at this market oriented way of working.
...(download the rest of the essay above)