Business Communication

Coursework assignment
Read the case McCowans Highland Toffee and complete the task following it. Present your answer
in an academic report format with numbered sections and sub-sections. You will need to make use of
your existing knowledge of business management and/or conduct some background reading on any
relevant models/theories/concepts that will facilitate a comprehensive analysis. For guidance, refer to
the seminar materials provided: business management tools, the model report (Birmingham Furniture
Company), language for cases, academic language and style, academic vocabulary, paragraphing, and
problems and solutions.

McCOWANS HIGHLAND TOFFEE

A Sticky End for Toffee Legend?
McCowans Highland Toffee, with its famous Highland cow logo, has kept many a young mouth chewing
since the 1920s. However, in March 2005, The Mail on Sunday reported the company as facing a sticky
end after receivers had been called in. One hundred jobs within the Stenhousemuir-based firm were at
risk. The workforce was reassured that McCowans would continue to trade until a buyer was found who
was willing to take on the business as a going concern. This caused uncertainty among the workforce.
The company has an established and strong brand name, and has strong positions in the chew bar and
bonbon markets. Only recently, the company was considering the possibility of additional investment,
but trading conditions have proved difficult due to the increasing costs of raw materials. British
manufacturers are paying over three times the world market price for sugar, one of the sweet
confectioners main ingredients. Many raw materials cost European manufacturers more than the global
price due to trade protection schemes. Movements in the currency exchange rate have meant that the
cost of importing raw materials has also increased for many manufacturers.
The company has already undergone internal restructuring to survive. Originally founded in the 1920s
by Andrew McCowan, A. McCowan & Sons Ltd was sold to Nestl in the 1960s and was the subject of
a management buyout in the late 1980s, before being bought by Dutch company Phideas in the mid
1990s for 3 million. There was another management buyout in 2003.
In 2004, a 125,000 regional selective assistance grant was awarded for an expansion project. Sourcing
finance is never easy for smaller organisations. Also in 2004, McCowans paid almost a seven figure
sum to buy out an English sub-contracting manufacture of its bonbon brand. This acquisition was
facilitated by Clydesdale Bank. Borrowing money is always risky as interest payments mean another
expense to the organisation. This was done in an attempt to broaden the product base, and to deal
directly with top-named customers like Cadbury, Asda and the Co-op. The product is not always easy
to find for the consumer, although small independent retailers seem to stock it. The purchase allowed
them to acquire the plant and customer goodwill associated with the bonbon business. Such
developments gave no hint of todays problems.
Product Range
McCowans make many products besides Highland Toffee. They produce a Toxic Waste bar, a
Streaker bar, and Vimto bar which came about as a result of a deal with drinks manufacturer Vimto.
The names of these products suggest that they are targeting the younger end of the confectionary
market, whereas sweets (bonbons) meet the need of the older customer. Many older customers find
that McCowans products are nostalgic, bringing back childhood memories; several websites show
McCowans and other products which are remembered by the older consumer as something they ate
as a child.
Five bars of McCowans Highland Toffee can be purchased for 2.49. It is not possible to deal directly
with McCowans online; a missed business opportunity perhaps. Search engines produce many web
addresses, when McCowans Toffee is keyed in, ranging from toffee recipes to football clubs!
Healthy Eating
The companys shock entry into receivership was also reported in The Scotsman. They report that the
confectionary markets future is uncertain because of healthy eating trends. Parents, pressurised by the

media and more aware of the unhealthy diet of their children, now tend to restrict the amount of sweets
which children consume. One Scottish model is suing the company for the cost of her dental treatment,
claiming the acidity of the product damaged her teeth. If successful, this could snowball into further
legal claims, costing the firm a great deal of money.
Competition
Entering any sweet shop, it is easy to see the vast range of competitive products. Children like to try
new products, and traditional toffee products may not meet the current trend. Walkers crisps and
Cadbury market their products strongly on television and have been criticised for issuing vouchers
allowing schools to obtain equipment. The Food Standards Agency has also cracked down on the
marketing of sweets and snacks to children. Promotional pricing is used by the manufacturers and
supermarkets to encourage increased consumption. It is difficult for smaller companies to compete with
the marketing budgets of large companies such as Cadbury, who are reported to spend 10 million on
promoting the British soap opera Coronation Street alone. Attractive websites where children can play
games are also produced by these companies, which is yet another form of promotion.
[Sources: The Mail on Sunday, 5th March 2005; www.news.scotsman.com; www.bbcnews.co.uk]

TASK: PROBLEM-SOLUTION REPORT

You are a consultant. You have been hired by the managers of McCowans Highland Toffee to help
them solve the problems faced by the company. Read the case and write a report analysing the
problem(s) and suggesting solutions. Structure your report into four sections with the headings below.
As for the sub-headings, they will have to correspond to the specific problems and solutions you identify
and analyse.
1. Background and Statement of Problems/Issues
2. Analysis of Data
3. Alternative Solutions
4. Recommendations (for the short and the long terms)
NOTE: Further research on the company referred to in the case should NOT be carried out.
SUBMISSION GUIDELINES
1. Place your full name and section in the header on each page.
2. Number all pages.
3. Number all sections clearly, following the numbering format of the Problem-Solution Report.
4. Word-process your report in Arial font 10; line spacing: 1.5; alignment: justified.
5. Your report must be written in complete sentences, in a formal academic register.
6. Your total report should be three to four A4 pages long.
7. Save your work as a Word Document (Compatibility mode) file.
8. Give your document the following title: SURNAME NAME-Section-Case study title (Example:
MIRONESCU DANIEL-FB/EG/EAM/SPE-McCowans/Lingo24/Aberdeen Airport)
9. Submit it as an email attachment to emilia.placintar@econ.ubbcluj.ro
10. REMEMBER: A blank e-mail would appear impolite to your teacher!
SUBMISSION DEADLINE: FRIDAY 13 DECEMBER, 21.00 hrs