What is the most appropriate image of change for this leader?

Case study references are attached.

Please provide out-source references if yes.

Thanks!

SB PHOENIX ORGANIC flavours used by Phoenix could cost two to three times more than did artificial substi- tutes. Organic Food is . . . 0 Grown naturally without the routine use of synthetic agricultural chemicals such as fungicides, herbicides, insecticides, growth regulators, and soluble fertilisers o Processed with nil or minimal use of synthetic additives like stabilisers, emulsiers, antioxidants, preservatives, colours, and flavour enhancers 0 Much more than spray-free or residue-free because itis produced under positive agri- ecological management systems which work in harmony with nature Source: Bioro With the market overall, and supermarkets in particular, wanting to give only a 20% premium for organic products there was little margin. \"This has meant we have had to work more efficiently and smarter than our competitors. Sourcing a range and quan- tity of ingredients is also difficult and requires good long-th planning and strong relationships with suppliers,\" Morrison said. \"Strategically it's tough. But we're market leaders in this area, and it gives us an edge. And it also keeps our competitors at bay. They'll have a look at it and think the margins aren't there, it's too hard, it's too diffi- cult. There's only a certain amount of suppliers and Phoenix already has good rela- tionships with them.\" In addition to the challenge of tight profit margins, the demand for organic ingredi- ents far outstripped supply. \"We can't just go out in the middle of the down season and say I'd like some more strawberries, because there aren't that many organic strawberry growers," Morrison noted. About 60% 0f the company's production was organic. Some of Phoenix's natural products were being converted to organic, but it remained a chal- lenge merely to source enough certified organic ingredients. Saving the World and Making Money Phoenix was a privately held company. Morrison estimated total sales at about $N26.5 million in 2004, up from $NZ4 million in 2002 and $N25 million in 2003. Phoenix had been growing at 2530% per annum with similar predictions for the immediate future. Morrison acknowledged that it was not easy for a business to grow at that rate without outside capital. \"Cash flow is extremely tight," he said, although inventory turnover was relatively efficient at under three weeks. The land Phoenix bought in 2001 and its new buildings and planned extensions for 2004, were mainly financed through bor- rowing. Profits were continually ploughed back into the business. Exports made up 10% of sales and were, Morrison predicted, the most likely source for future growth. Sales in Australia had increased from less than $NZro,000 a month 60 CASE STUD'IES IN SUSTAINABILITY MANAGEMENT AND STRATEGY: THE OIKOS COLLECTION to $NZo7o,ooo a month with the deployment of personnel into Sydney on a one- week-a-month basis. When considering further expansion into Australia, Morrison sug- gested that the next step might be to use a contract manufacturer. He felt that invest- ing in plant and equipment in Australia would be too expensive given current debt levels. Morrison was reluctant to accept the compromises and loss of control that would likely come with outside capital. \"We built this company. We don't necessarily want somebody else telling us to do it a different way. We're quite happy with the results we've achieved; we think we're doing it quite well.\" Social and environmental sustainability was one aspect of the business that Morri- son, also Chair of New Zealand's Sustainable Business Network, was unwilling to com- promise on. Even in the bathtub days, the three founders always tried to make their products in an ethical manner, providing a healthy, natural premium product with the least impact on the environment. They believed that the market had caught up to their early thinking. \"In the last to years we've seen more interest from the market in things that are important to ussafety, accountability, values, integrity and sustainability,\" Morrison said. Gradually, Phoenix had evolved from an instinctive, ad hoc approach to sustainabil- ity to adopting internationally recognised sustainability protocols. In 1996, the local council's Cleaner Production Programme got Phoenix management thinking more about its water, waste and energy reduction systems. Three years later the founders were introduced to The Natural Step, a Swedish framework for sustainability that they implemented at Phoenix. The company even had a Sustainability Director, employed part-time, Rachel Brown. \"My role is to ensure that everything the company does oper- ates in a way that is environmentally and socially responsible,\" Brown said. From her earlier cleaner production role involving Phoenix, Brown had gone on to the Auckland Environmental Business Network which Morrison eventually chaired before it went nationwide as the Sustainable Business Network in 2002. Creating (and Implementing) a Strategic Sustainability Plan Meanwhile, back at Phoenix, Brown, Morrison and others spent time coming up with a long-term sustainability plan that covered five key areas. The plan considered staffing is sues, reduction of fossil fuel use, avoiding persistent chemicals, protecting the envi- ronment and using resources efficiently. Sticking to this plan meant some hard choices. To offset the environmental impacts of the fossil fuels used in transportation, Phoenix ran a Greeneet programme and encouraged Auckland distributors to use low-sulphur diesel. The choice between glass and plastic illustrated the dilemmas associated with hav- ing a sustainability philosophy. It would have been a lot cheaper for the company to stop using glass bottles and put everything into plastic. Plus, plastic was lighter than glass was and required less fuel per shipment. But plastic was a non-renewable resource and Brown believed that plastic contamination of the beverages could poten- tially cause long-term health effects for people. Glass also fitted better with the com- pany's upmarket image. \"What are the social implications? What are the economic implications? So we have to go through those for all the major decisions," Brown said. Phoenix was also constrained in how far it could unilaterally take its sustainability programme. The company would prefer glass bottles that were returnable and refill- able, but the only provider of glass bottles in New ZealandACIdid not make refill- able glass. On its own, Phoenix was not big enough to inuence that market dynamic, but it was an active participant in the local organic cluster of many small enterprises. The company's sustainability ethic also limited its product options. Bottled water would seem to have been a natural for Phoenix, but most water was sold in plastic. Brown also pointed out that there should have been no reason for people in New Zealand to be drinking bottled water. \"The fact that our rivers have become polluted or that people are not feeling confident about drinking water out of the tap is really a worry," she said. Instead of joining the rush to make a profit from bottled water, the Phoenix philosophy suggested New Zealand should look seriously at how to restore people's confidence in drinking tap water. Another critical issue for the company was genetic engineering. The company had a clear stand promoting a 'GE-free' New Zealand. \"Not only is there a question over the damage to our natural ecosystems, but there seems to me a strong economic case for remaining GE-free," Morrison said. Morrison also suggested that Phoenix was targeted more by competitors eager to tar- nish its environmental good-guy image. \"The whole sustainability thing is interesting because you go down that track and you start talking about what good business is about etc. from a sustainable perspective, and then you're opening yourself up to criticism. People are just desperate to knock you down." He didn't really mind the extra scrutiny, however. \"I think it's really important for organic businesses to make sure that they're squeaky-clean.\" Despite the challenges, Phoenix's directors clearly saw its social and environmental sustainability image as a winning combination and the company had collected a num- ber of awards for its sustainable business practices. \"The fact that they're doing all this sustainability stuff keeps this loyal customer base going. It makes it very difficult for other companies to copy because the company brand is so interlinked with the owners, and their beliefs systems, and their value base," Brown said. Mapping the Beverage Landscape Phoenix was pretty much out on its own in the organics beverage market, the only player of any real size. But it was selling in a market where not everyone was concerned whether their drinks were organic or not. So, the wider non-alcoholic beverage indus- try whose players were arguably less environmentally and socially concerned made for a very competitive landscape. Per capita consumption of soft drinks (carbonated bev- erages) in New Zealand was high by world standards at 360 bottles per year (although lower than the US at 450). However, the market was considered mature and had been 62 CASE STUDIES IN SUSTAINABILITY MANAGEMENT AND STRATEGY: THE OIKOS COLLECTION growing at 4-5% annually. Coca-cola New Zealand had dominated soft drinks since coming to New Zealand in 1939 and in 2004 continued to sell the majority of soft drinks in New Zealand, including the top six brands. Private label soft drinks had eaten into the virtual monopoly of Coca-Cola in recent years, while Pepsi had remained a minor player in New Zealand with less than 10% market share. Coca-Cola was also active in other non-alcoholic beverage segments beyond soft drinks. The 2002 acquisition of Rio Beverages had gained Coca-cola access to New Zealand's second largest juice company. Key brands from the acquisition-Keri and Robinsons-accounted for 20% of Coca-Cola's New Zealand production in 2004. The largest juice company in New Zealand was Frucor-itself acquired by the French multi- national Groupe Danone in January 2002. Frucor's origins dated back to the 1961 launch of Fresh-Up under the old Apple & Pear Marketing Board. In 1988, Frucor had been spun off from the Marketing Board and in 1999 Frucor had acquired the Pepsi bot- tling business in New Zealand from Lion Nathan. Both Frucor and Coca-Cola had brands in other segments such as bottled water and energy drinks. Bottled water was the fastest-growing beverage segment in New Zealand-as it was throughout the Asia-Pacific region. Energy drinks had also shown strong growth, with Frucor's V brand being number I in Australasia. Coca-Cola's new regional managing director, George Adams, saw real growth potential in both water and juice: "New Zealand is a very small bottled-water consumer because no one has taken the market and built it, no one has told consumers it tastes better than tap water, that it is treated and convenient. The juice business is low due to a reasonably under- developed market, which needs a big player with serious distribution money to grow it. We want to lift juice-it is a market which responds to innovation in packaging and flavours. Over the next two years we will bring more innovation to the business." Fru- cor had a stronger reputation for innovation stemming from its introduction of V and Mizone. EXHIBIT 2.3 Grocery Sales By Category Source: Grocers' Review, October 2003; AC Neilson 2003 (NZ$) 2002 (NZ$) Carbonated Beverages 199,864,802 180,314,022 New Age Beverages 27,219,073 25,789,626 Fruit Juice & Drinks 124,039,971 115,803,445 Non-Carbonated Beverages 44,123,295 44,589,664 Non-Carbonated Mineral Water 20,448,717 13,490,378 Kennedy, G. (2004, February 5) "Kiwi's thirsty enough?" National Business Review, p. 28. WN Ibid. Without being exact, a Frucor spokesperson kindly estimated that sales through non-grocery chan- nels were generally similar in scale to grocery sales for the industry overall.Case 2 PHOENIX ORGANIC 63 EXHIBIT 2.4 Phoenix versus the Big Dogs in New Zealand, 2003 Sources: Phoenix, Coca-cola, Frucor, Groupe Danone, Neilson Media research Advertising Corporate Global Company Staff ($000) Key Brands Sales (NZ$m) Phoenix 25 40 Phoenix 6.5 Frucor 500 13,619 V, Fresh-Up, Just Juice, G Force, 25,265 Mizone, Evian, Pepsi Coca-Cola 1000 28,298 Coca-cola, Fanta, Sprite, L&P, 33,500 Pump, Keri, Powerade Coca-Cola planned growth in soft drinks from a strategy of 'expandable consump- tion'-based on research that showed it didn't seem to matter how many bottles were bought, it all got drunk. "If soft drinks are in the home they will be used, so we are con- stantly widening our distribution to have the product within an arm's length of desire," argued George Adams. "Seventy per cent of product is bought on impulse. It's all about . . . understanding placement and making it easy for people to buy."5 Aside from Coca-Cola and Frucor, other competitors with Phoenix included Arano, Juice Express and Charlies in juices. The overlap with Phoenix was not that large and Phoenix had co-operated with Arano in the past, with Phoenix supplying carbonated drinks and Arano juices to specific events. The closest competitor to Phoenix in terms of products and style was probably San Pellegrino. Having already established a high- end position in Australia, San Pellegrino had made inroads into the cafe and restaurant market in New Zealand. Manufactured in Italy, San Pellegrino offered a collection of lightly carbonated flavoured mineral waters. Exhibit 2.5 shows the range of drinks in a typical Auckland cafe, along with the relative selling price of the different drink options. The Australian non-alcoholic beverages market was similar to New Zealand in both preferences and trends. Key differences were in terms of size-where the Australian market was approximately five times as large-and in terms of a larger number of com- petitors.EXHIBIT 2.5 Drinks Available at an Auckland CBD Cafe in March 2004 (continued opposite) Selling Main Price Refrigerator Producer Product Description $NZ Container Size Claims Top Shelf Arano juice Spirulina fruit cocktail 4.00 Plastic 375 ml No preservatives, no bottle animal protein Berri-licious fruit smoothie with Echinacea and 4.00 Plastic 375 ml Medicinal herbs acerola bottle Orange juice 3.00 Plastic 250, ml No preservatives bottle Takaneti Agri (Iran) Pomegranate juice 2.50 Tetrapak 200 cc Fresh n' Fruity Wildberry . Peach & Passionfruit . Strawberry 2.50 Plastic 3ooml National Heart Yoghurt to go Sensation bottle Foundation approved 99.5% fat-free 2nd Shelf Phoenix organic Guava & Apple Juice . Pear & Apple Juice . Orange 3.00 Glass bottle 275 ml Organic Mango & Apple Juice . Feijoa & Apple Juice 64 CASE STUDIES IN SUSTAINABILITY MANAGEMENT AND STRATEGY: THE OIKOS COLLECTION Brd Shelf Sanpellegrino (Italy) Pompelmo-sparkling grapefruit beverage 3.00 Glass bottle 200 ml Aranciata Rossa-red sparkling orange beverage Limonata-sparkling lemon beverage Valfrutta Co-operative Pera-Suco & Polpe (thick pear juice) 2.00 Glass bottle 125 ml Agricole (Italy) Pesca gialla-Succo & Polpe (thick peach juice) 4th Shelf Coca-cola Amatil Diet Coke 2.50 Glass bottle 330 ml ( Australia Coca-cola Red Bull Gmott Red Bull Energy Drink 4.00 Aluminium 250 ml Vitalises body and ( Austria can mind Frucor Beverages V Guarana Energy Drink 2.50 Aluminium 250 ml Invigorates, can replenishes energy 5th Shelf San Pellegrino (Italy) Sparkling Natural Water 5.00 Glass bottle 500 ml Natural, with natural Sparkling Natural Water 3.00 CO. Bundaberg (Australia) Ginger Beer-brewed soft drink 3.50 Glass bottle 375 ml Naturally brewed to be better Rutaruru Water Pump Mini Spring Water 1.50 Plastic 400 ml bottle Separate Primo Flavoured Milk . Chocolate, Banana & 2.00 Plastic 350 ml Reduced fat, a big dose Refrigerator Strawberry bottle of calcium, and zero preservatives. NaturalC0582 PHOENIXDRGANIC 55 (from previous page) Other Options SNZ Water (Self help) Free Coffee Short black 300 Eapputino 0 Long black ' Flat white 3.50 Latte - Mochaccino 0 Hot Chocolate 4.00 Soy Milk .50 Tea English Breakfast - Earl Grey ' Lemon and Ginger 0 Green 350 Peppermint 0 [ha momi le Milkshakes Kaen Krazy 0 Chocoholic . Strawberry Fields * Bananarama . Vanilla 450 Ice 0 Sublime l[reaming Soda Future Challenges . . . Ironically, Phoenix's successes had started to work against it in some segments of the market. There were some very top-end cafs that would not take the Phoenix brand because it was getting more commonplace. The company was also attracting more attention from the big players in the New Zealand beverage industry, which was one of the reasons Phoenix was looking so closely at its Australian options. To continue op er- ating only in New Zealand and maintain historical growth levels, Harris said Phoenix would have to find ways to take the brand bigger, which would mean selling cheaper or launching other products. Either option would likely draw fire from bigger competi- tors like Coca-Cola and Frucor. The company was leery about going head to head with the really big players. \"Going directly against Coke or Frucor is inherently stupid in my opinion,\" Harris said. He found the Phoenix niche a safer scene. \"There are certain rules for survival in this game and a lot of them are around understanding your market, understanding your niche. Once you get that down, you know your niche, then you can see what your tolerance is for other decisions.\" The recent grth trends augured well for Phoenix's immediate future; however, Morrison was aware of the risks. \"We've still got to be realistic. We're not a huge com- pany and we're still vulnerable. There could be something that happened that pulled us down.\" One risk he saw was the danger of growing too big and losing the focus on