Corporate Strategy: Company Project Part 1 - RPC Group Plc

Introduction

According to RPC Group PLC (2012), the RPC Group is a UK based firm. It deals in the manufacturing of rigid plastic items, which are used for packaging different products. The company offers products which are manufactured using the three key processes of conversion. These processes include injection moulding, thermoforming and blow moulding. The company has approximately 50 operational firms. These firms are located in 18 countries across the globe. Most of the subsidiaries of the company are located in Europe, which makes the company a leader in the plastic manufacturing industry in Europe. The company employs approximately 7000 employees across all its operational sites.

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The company has a substantial number of customers. Its customers can be traced from the largest manufacturing companies in Europe to the smallest enterprises that deal with packaging and distribution of consumer products. The core objective of the company is to become the core player in the industry in which it operates. This is based on the fact that the company is one of the most competitive firms in the industry (RPC Group PLC 2008).

Edward and Constance (2001) observed that the sustained performance and growth of a company is an indicator of effective application of growth strategies. In the recent years, the company has continued to face challenges of growth due to an increase in the cost of input. This was brought out in the recent annual reports of the company. This issue was reiterated by the Chairman of the company in the annual report of 2008 (RPC Group PLC 2008). The chairman noted that the main challenge of the company was adjusting to the input cost pressures. This paper discusses the corporate strategy of RPC Group. The paper explores the strategies that have been applied by the company in order to aid it in maintaining its competitiveness. In the exploration of the corporate strategies of the company, the paper uses two main features of analysis: Internal and external analyses.

Overview of the company

As mentioned in the introductory note, RPC group is among the leading companies in the plastic manufacturing industry in Europe. The company manufactures a diverse number of plastic containers. This means that the company has a wide coverage of customers in the entire world. This is further supported by the fact that a substantial number of firms in Europe package their products in plastic containers. Several other companies, which do not package their products in plastic containers, use plastic lids to cover the containers used for packaging their products. It can, thus, be argued that the move of the company to operate in this industry is strategic. The industry has a significant number of potential customers. These customers are drawn from the higher number of manufacturing firms that are prevailing in the EU economy. The company has strongly ventured in the personal care and beauty sectors, the drinking cup market, the margarine industry, and the manufacture of multilayer packs, which are used for packaging food products that are sensitive to oxygen. This is strategic since all these industries are packaging intensive. They have a significant coverage of customers. They, therefore, present numerous trade opportunities for RPC (RPC Group PLC 2008).

According to LSE (2012), the RPC Group is listed on the London Stock Exchange. It was listed on the LSE in 1993. This points to the fact that the company has a large capital base. This is also a pointer to the fact that the company is active in terms of trade and investment. The share price of the company stands at approximately 392.00. The company has focused on the European market. However, the current prospects of global economic growth show that the company may develop an interest in investing outside Europe. This can be derived from the growth and expansion trend witnessed in the company for the last one decade. During the last decade, the firm expanded the number of its operational sites from about 10 to the current figure which stands at 18 (RPC Group PLC 2012).

Internal Environment Analysis of the RPC Group

RPC stands out as one of the companies that are performing well in the industry. The company keeps performing well in spite of the numerous operational constraints. According to the corporate strategy theory, corporate strategies have proved to be effective for different countries. Therefore, it is imperative to say that RPC Group had done remarkably well in applying strategies that have helped to shape its internal environment. The company operates in a fairly competitive industry. One of the main strengths of the company is that it has operated in the industry for a long time. The virtue of operating in the industry for a longer period of time has helped the company to master the operational environment. This gives the company a strategic advantage. It can easily predict the dynamic trends in the industry and make quick adjustments to its operational structure, thence making profits (Garry 2012). The company has a decentralized structure of administration. With a total of 18 operational firms located in different locations, each operational firm works independently. Most people view this as a strategic move. From a strategic standpoint, subsidiary firms work well when they are allowed to operate independently. The reasons for this is that each operational area in which a company is located has different factors that affect the company. When operating independently, subsidiaries become flexible in terms of making business choices that are compatible with the prevalent corporate environment. Therefore, the level of decentralization of management in the RPC Group is a contributor to the success of the company. The aspect of centralized management only features in the cumulative evaluation of the company’s performance. This also makes it easy for the company to manage its employees. Employee management is a critical factor for organizational success. It is featured in strategic human resource management. Managing small groups of employees is easy than managing the seven employees wholesomely. It is easy to attend to the needs of employees when they are managed from the subsidiaries. This helps the company to develop healthy relationships with its employees. It is also a contributing factor to the creations of a positive working environment in the organization (Robinson 2010).

Another aspect of the organization, which makes it competitive, is the diversification of its production potential. Part of the traditional strategy of the company is its triplicate nature in its operation. The company uses three processing methods. In regard to this strategy, the company has a wider product range as compared to other companies that operate in the same industry. The company offers a wide product range. The product categories of the company include thermoformed packs, injection model packs, injection-blown packs, sheet blow packs, extrusion-blow packs, and injection-stretch-blown packs. The company also produces goods that cover a broader section of the market. These markets include coffee, dairy products, cosmetics, spreads, pharmaceutical products, as well as surface coatings (RPC Group PLC 2012).

According to the RPC Group PLC (2012), the company has many stakeholders. The company categorises its customers among its highly valued group of stakeholders. Most of the customers of the company are corporate organizations. The company pursues a customer centred approach in the management of its relationship with the customers. Strategically, the customer centred approach helps the company in maintaining relationship with its customers. Value for customers is a desired step. It enhances the development of customer loyalty (Sanchez 2005).

Owing to the fact that the company is listed among on the LSE, as well as the FTSE, it has another special group of stakeholders; its shareholders (Fast Market Research 2012).

The Analysis of the External Environment of the RPC Group

The RPC Group operates in a competitive market; Europe. It is important to note that the main operation of RPC is located in the United Kingdom. United Kingdom is among the leading economies in the world. Having mentioned this, it is vital to mention some of the features that make up the economy of the United Kingdom. The country has a favourable political environment for business operation. The UK has continued to enjoy political stability for nearly its entire history. Political stability implies that there is a peaceful climate for business. With no records of political violence, The RPC group finds a sound environment for conducting its activities. Other supportive factors for the company can also be derived from the political landscape in the main country of operation for the company. The country has a stable government, which enhances economic development (Organisation de coopération et de développement économiques, 2002).

According to Organisation de coopération et de développement économiques (2002), the government of the United Kingdom pursues a lot of policies of economic development. It has a higher regard for the economy, thence, enhances the growth of the economy through the device of favourable corporate policies. Sound corporate polices enhances the growth of different industries. Companies take advantage of the policies by coming up with strategies that help them adapt to the policies. The United Kingdom has a large population. Most of the residents of the UK are well educated. Therefore, the company is advantaged in the sense that it easily draws its employees from the population. With the presence of highly skilled employees, the company has managed to maintain sound records of performance. The population also serves in another perspective. It is a market for the packaged products, which are drawn from the processing and manufacturing industry. The rate of technological development in the United Kingdom is high. United Kingdom is often listed among the most technologically advanced countries in the world. Technological advancement is one of the facets of industrial growth.

Processing and manufacturing technologies aid in industrial growth and expansion. These technologies are readily available in the country in the chief operational country for the RPC Group. The high number of industries in the United kingdom is another critical factor for RPC Group. Most of the customers of the company are manufacturing and processing firms. They can be, thus drawn from the industrial sector of the UK. A substantial number of these factors are also prevalent in most of the countries of Europe. Being a company with sound management, the

RPC group keeps developing sound corporate strategies. One of the strategies is the use of its strong local presence to expand into other countries in Europe (Zahra 2000).

The second point entails the expansion strategy of the company. This can be termed as yet another strategic move by the company. This has brought a lot of operational benefits to the company. The European countries, in which the company has staged its operations, include Germany, France, as well as the United States (Fast Market Research 2012). However, the United States does not lie among the countries of Europe. Nonetheless, the United States is the leading economy in the world, therefore, it is one of the favourable locations for any given company. The country has a large market, which is readily available. Having attained growth in the United Kingdom, the management of the RPC group has shifted their attention form the United kingdom to other operational markets in Europe and even beyond Europe. The question that can be posed here is whether this is a strategic move. The strategic sense in the strategy can only be explained by citing the benefits that accrue to the expansion of the operations of the company. Perhaps, it is important to explain the system that was adopted by the company in its expansion plan. The RPC has been systematic when getting into new areas of operation. This indicates rationality in the expansion plan of the company. The other point is that the company expands into new areas through the acquisition of other firms. This can be further explicated by explaining the advantage of this expansion tactic (Martin 2012).

The tactic is used as a cost cutting measure by the company. Entering into a new operational destination as a totally new venture is quite costly. This resonates from the initial transactions, which consume a lot of time and financial resources. Corporate moves are also valuable to a company when they aid in eliminating pressures that are pulling down a company either directly or indirectly. In the case of the expansion strategy of the RPC Group, it can be said that the strategy is helping the company to address a problem that is pulling it down. This problem is the high cost of material. The price of polymer, which is the main material that is used in the manufacture of the plastic products, has been rising (RPC Group PLC 2008).

Combined with other economic factors like the financial crisis in the Eurozone, cost cutting measures in the company have become eminent. Producing from the new operational sites is also beneficial in the sense that the cost transportation and distribution of products is minimized. Provided that the customers are located in the new operational sites, it becomes easy for the company to move goods from the new locations to the customers in those regions. In new operational sites, it is easy for the company to gain new customers. In fact, this is argued to be the main reason why firms choose to expand into new areas (Mas, Nicolau & Ruiz 2006). By virtue of expanding into new markets, the company has widened its scope and its presence in the wider market. This means that the growth opportunities have been widened. The image of the company is broadening as it keeps investing in new regions (RPC Group 2012).

The main challenge for the company, which originates from the larger market, is the issue of environmental conservation. RPC Group manufactures plastics. According to the advocate of the environment, plastic products are among the leading polluters of the environment. Therefore,

RPC Group is among the main targets of the environmental movement. Active participation in corporate social responsibility is one of the mechanisms that are used by companies to draw away the negative feelings and attachment from the publics (Hancock 2005).

Conclusion

The RPC Group is one of the companies that deal in the manufacture of plastic packaging products in the world. The company has operated in the plastic manufacturing industry for a long period of time. During its operation in the industry and the larger market, the company has faced varied situations forcing it to adopt a number of corporate strategies. Most of the strategies that have been applied by the company have been instrumental in addressing several strategic issues facing the company. By settling the strategic issues in the company, the corporate strategies have been key in enhancing the internal and external competitiveness of the company. One of the notable strategies that have brought a substantial number of benefits to the company is the expansion through acquisition (Damoiseau, Black & Raggio 2011). Through the strategy, the company has gained a strong footage in the expanded market. The application of corporate strategies is the main reason why the company has maintained a strong position in the industry. It is wise for the management of the company to keep developing and implementing competitive strategies. One area of strategy which needs focus is the diversification of operational activities in the company. Perhaps, the company needs to focus on the development of strategies that are vital for improving its corporate image. Such strategies can help in boosting the relationship between the company and its external publics.

Reference List

Garry, W 2012. ‘RPC Group; QUESTOR’, Daily Telegraph, viewed 30 September 2012, <http://www.telegraph.co.uk/archive/>.

Robinson, M 2010, ‘RPC to refocus on growth’, Investors Chronicle, viewed 30 September 2012, <http://ryerson.summon.serialssolutions.com/search? s.q=corporate+strategies+of+the+RPC+Group+of+companies>.

Damoiseau, Y, Black, WC & Raggio, RD 2011, ‘Brand creation vs acquisition in portfolio expansion strategy’, Journal of Product & Brand Management, vol. 20 no. 4, pp. 268281.

Martin, S 2012, ‘Trends in expansion through acquisitions: What is driving acquisition activity?’, Mergers and Acquisitions, vol. 47 no. 3, pp. 44-45.

Edward, BH & Constance, HE 2001, ‘Does corporate strategy matter?’, Strategic Management Journal, vol. 22 no. 1, pp. 1-23.

Fast Market Research 2012, RPC Group Plc: Packaging company profile, SWOT and Financial Report, viewed 30 September 2012,

<http://www.fastmr.com/prod/451645_rpc_group_plc_packaging_company_profile_swot _and.aspx>.

Hancock, J 2005, Investing in corporate social responsibility: A guide to best practice, business planning & the UK's leading companies, Kogan Page, London.

LSE 2012, Rpc Group Share Price (RPC), viewed 30 September 2012,

<http://www.lse.co.uk/SharePrice.asp?shareprice=RPC>.