Bush Boake Allen
Since its foundation in 1966 by merging of three British companies, Bush Boake Allen had been outstanding and known to one of the leading firms in the flavor and fragrance industry. The firm seemed to be in a stable industry as such food and fragrance are closely associated with people’s daily life.
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However, BBA had to be coped with the cost pressure and high risk given the traditional business model. On the top of that, by using new technologies, some firms can analyze production cost information of flavor and even chemical components as well.
That made flavor prices in the market might be forced to decrease (Stefan Thomke and Ashok Nimgade 2000). For the above reasons, Julian Boyden, CEO of BBA is about to begin new business strategy called “Mercury Project” which allows their customers to actually participate in flavor development process via online-based application software.
In a setting where customers can handle flavor, there may be some advantages in terms of time-saving and high-rate acceptance by customers themselves who manipulate flavors in the development. This may bring about substantial change not only to the firm’s business model but also relationship between the firm and customers. The thing is, however, not absolutely optimistic to the firm, as senior managers of BBA countered the new approach may be somewhat challenging and controversial on following several issues.
First and foremost of all, the firm may be concerned with how much they give customers authority to control flavor development. This is related to where the flavor sample product machine should be located. For example, if customers get an authority to control the flavor development in their sites, they had to pay half million dollar for machine which may be not very affordable to the customers.
Secondly, even if the customer has an opportunity to manipulate the new machine, they could be frustrated if they have difficulty operating the machine and software or fail to get the flavor they initially wanted. What is more, even customers who take advantage of the new software might underestimate flavorsists of the firm.
Thirdly, the role of marketing is doubtful in the new business model. Traditionally, division of marketing had significant impact on the firm performance due to the fact that marketers closely had relationship with their customers from the flavor development to delivery of finished sample. On the other hand, as customers can directly involve in flavor development, task of marketers may decline.
This paper will begin with the overview of the company and market environment of that time period. Then the paper will continue with the analysis of the business strategy and present managerial recommendations for Bush Boake Allen in the end.
2. Company Overview: Bush Boake Allen
Since its foundation in 1966 by merging of three British companies including Bush Ltd., A. Boake Roberts Ltd., and Stafford Allen Ltd5), Bush Boake Allen, Inc had provided flavors and fragrances to the consumer products companies for use in foods, beverages, soaps and detergents, and so on.
The BBA’s key global strategy had been “maintaining a decentralized structure. They tried to give empowerment to regional subsidiaries to locally make their decision (Stefan Thomke and Ashok Nimgade 2000). Especially in 1980’s, through a “Gaps in Maps” strategy, they started to launched global sites to accomplish consistent supply to customers and meet the local preferences. By 2000, BBA had 6 major sites Montvale, Dallas, London, Chennai, Singapore, and 13 minor sites worldwide.
In 1982, BBA was merged by Union Camp. In 1994, the company went for public with a seven-year $240 million capital investment program. After that the firm emphasized on production innovation by launching a new “creativity center”.
The firm spent $25 million on research and development to worldwide sites each year in order to get global prominence. During the 1990’s, the company steadily grew, and the company’s main sector became flavor business, which is accounting for 58 % of sales in 1997.5) In 2000, BBA conducted operations on 6 continents, had locations in 38 countries worldwide.
Three main facilities are in New Jersey, London, and India. Annual revenue is half-billion dollar (flavors and fragrances accounted for 80%). With strong overseas presence, it is part of top 10 leading firms in the flavor and fragrance industry (Stefan Thomke and Ashok Nimgade 2000).