Backwell IXL is the small-to-medium sized manufacturing company, the main sphere of which is divided into three categories, such as foundry, appliances and manufacturing. The defining feature, and one of the most interesting facts of its history is the fact that it was founded in 1858 as a family based business enterprise. Considering the fact, that family enterprises either die in competition or grow up to large enterprises, it should be emphasized that staying a middle-sized company, Backwell IXL exceeds any economic and business rules.
The aim of this paper is to give the necessary information on this company, its history, structure, strategy, marketing etc, in order to realize the principles of the company’s success and the slow dynamics of its development, without experiencing excessive pressure from the side of competitors, and to offer the recommendations, in order to stay alive, and manage the changes properly.
To begin with, it should be stated that the company was founded in 1858 as a blacksmith shop in Australia, Geelong West, as a manufacturer of domestic appliances, the products made of pressed metal and metal castings. Originally, the history of business development is not as dynamic as the evolution of the marketing strategy. As it is stated in McLean (2008, p. 12):
The name of the business changed over time. In the 1870s Ebenezer’s stove works made its products under the name E. Backwell. On 1 January 1891 the business began trading as E. Backwell & Son, but after Ebenezer’s death in 1902, operated for a short time as Backwell Bros., before reverting to E. Backwell & Son. On 14 February 1923, the business was registered as a company under the name E. Backwell & Son Pty. Ltd., and finally on 20 May 1977 the company name was changed to Backwell IXL Pty. Ltd.
On the one hand it may be regarded as the failure of the branding strategy, nevertheless, there was no such definition as branding in Australia in the end of XIX century. As for the historical development of the company, it should be stated that the business origins of the company are closely associated with the providing of high quality blacksmith services, as professional smiths were highly valued.
Due to the fact that the population of the city increased essentially, since the workshop had been created by Ebenezer Backwell, the financial success was evident, so, the family had an excellent opportunity to extend the business activity, and, as Geelong become the manufacturing center, and was even more significant than Melbourne from this point of view, the Backwell’s workshop became a part of the industrial structure, deeply involved in the manufacturing production of Australia.
Nevertheless, the name and the logo were subjected to changes, thus, decreasing the allover awareness of the workshop within the local population. As McLean (2008, p. 35) emphasizes:
There was a similar evolution in the format of the business logo. Up until the 1920s the logo used on stoves and in advertising was IXL. During the late 1920s and early 1930s the logo was changed to I.X.L. and remained that way until the late 1970s. It then became IXL and remained as such until the early 1990s, when it took its current form of IXL. The convention adopted in this history is to depict the business logo throughout as IXL.
The division of the company into three manufacturing branches provides an opportunity to get involved into three related spheres of metal works production. Originally, the company’s structure is fully corresponding with this division, and the departments of the company are similar with the manufacturing directions, which are foundry, appliances and manufacturing. Thus, foundry is aimed at providing ferrous castings for the aluminum engineering and mining industries. Manufacturing division provides stamping for the automotive, power and appliance industries. Appliances sphere is aimed at inventing and manufacturing the products and equipment for Heating, Cooling, Outdoor and Cooking categories. Originally, it should be stated that the division of the structure provides the sufficient level of diversification, thus, making the company compelling enough for the solid and firm competency level in the industrial sphere and business sector, the company is involved into.
Considering the fact that the size of the company is small-to-middle, as it is stated in the company’s profile, the division of the labor divides the manufacturing forces, thus, lowering the manufacturing and industrial potential of the company in general. In accordance with Reddy (2004), there is strong necessity to emphasize that the original capability of the company is oriented at the industrial sector of the manufacturing business, nevertheless, in order to extend its business activity, the company needs to incorporate designing practices, consultation on the matters of industrial design, and, probably the company should open a workshop school, in order to attract some popularity to this industrial sphere, and make the brand more advertised. Nevertheless, the planned extension of the business activity is only vertical, while the potential of such extension has been already exhausted.
On the other hand the company should pay attention to the issues of supply management, as raw materials and basic resources are of high necessity, and of high value for this business industry, and company needs to extend its structure, considering the matters of supply management.
The company’s strategy is oriented at targeting the private individual customer, and small, as well as middle enterprises, companies and firms, as this amount of work and orders is suitable for the company, and its industrial capacities. As the Chairman of the Backwell IXL Robert Backwell emphasized:
Backwell IXL is a company of enterprise and pragmatism, based on an attitude of persistence and a belief that achievement is possible no matter what the circumstances. It is noteworthy that some of the most significant changes in the company’s direction have been taken at times when the nation was experiencing significant economic downturn. Much of the company’s success is due to the fact that it is still a family business five generations on. (McLean, 2008, p.8)
In the light of this fact, it should be emphasized that the original value of the strategy is concealed in the notion that the strategy itself, as well as the essence of the manufacturing process is strictly oriented at the high quality manufacturing and satisfaction of the needs and wishes of the customers. Originally, this point is regarded to be the central one in the strategy, which leads to success and long prosperity of the company. Nevertheless, the strategy lacks the points, that will encourage the company’s development and extension of the business activity.
It has been already stated that the company needs to extend its structure, and this extension requires the particular changes in the structure, which should be oriented to the supply management practices. Thus, the raw materials and resources could be of higher quality. (Statt, 2007)
Product development is often regarded as one of the most important factor for the extension of the company’s activity; nevertheless, in relation to Backwell IXT this notion is false. The company is not focused on the issues of developing the product, as the professionalism, quality of the products and marketing issues, associated with product are on the highest level. The chairman of the company emphasizes the following statement:
Unlike the past when a change in the direction of the company was generally a response to local market pressures that played out over years, if not decades, today the pressures are global and are occurring within a rapidly decreasing time frame. The past can act as a guide, and we ignore its lessons at our peril, but we must also recognize the importance of managing change. The main challenge that faces us today is to make the right strategic decisions for a positive future. (McLean, 2008, p. 9)
From this perspective, the issues of product development look rather exhausting and unnecessary, as the level of competition is high enough for creating difficulties, but are not sufficient for destroying the business structure of the Backwell IXT. All the management of the company is able to do in these circumstances is to maintain the existing level of sales and quality of the product, and provide the necessary level of development for staying alive and resisting the competition within the business sector. Meeting changing customers needs and demands is the key task for the product development strategy, thus, the company is keeping its own sector of customers rather firmly. (Zacharia, Mentzer, 2007)
As for the matters of product development, it should be emphasized that the matters of supply management, customer care, marketing principles and brand promotion practices should be incorporated into the only strategy, and become the elements of a single business plan, aimed at extending and empowering the business performance, while at the moment these are the separate strategies.
The last but not the least point of the research is the quality management principles, which Backwell IXL management incorporates. Considering the fact that the are no significant opportunities for the business extension, and the company is not able to develop the product, thus, extending the sector of consumers, nevertheless, in order to keep the stable quality of the product, and not to lose the existing range of consumers, the company needs to pay a particular attention to the issues of quality management. The main principle which is pursued by Backwell IXL is the satisfaction of customer’s needs, consequently, the quality management is based primarily on the principles of Total Quality Management with a strong emphasis on Customer Care principles. As Hackman and Wageman (2005, p. 321) states, such strategy may be outlined the following way:
Some of the common differentiators between success and failure include commitment, knowledge and expertise to guide improvement, scope of change / improvement desired and adaption to enterprise cultures. For example, quality circles do not work well in every enterprise (and are even discouraged by some managers), and relatively few TQM-participating enterprises have won the national quality awards.
From the angle of this perspective it should be stated that Total Quality Management is closely associated with the matters of maintaining the high quality of the production, nevertheless, the company needs to take care of the relations with the suppliers, as raw materials and resources play the most important and valuable role for the total quality of the production, and the satisfaction of the customers as a result. Nevertheless, the company pays few attention to this, and some of the suppliers prefer working with the competitors of the Backwell IXL, instead of extending the cooperation with this company.
Finally, there is strong necessity to emphasize that the analyzed principles and components of business activity, performed by Backwell IXL are closely associated with the matters of close cooperation with the customers. On the one hand, it appears to be beneficial for satisfying their needs and demands, manage changes, related to these needs, and also keep the quality of the production at a high level. Nevertheless, this orientation prevents the company from the further development, including the business extension, structure expansion and product development. As for the benefits of this orientation, it should be also emphasized that the original reason of this lack of development is probably the willingness of the management to keep the format of the company’s activity close to family business, as Backwell’s workshop was initiated in this manner, and this manner is staying the central principle of business activity.
Hackman, J. R., & Wageman, R. (2005). Total Quality Management: Empirical, Conceptual, and Practical Issues. Administrative Science Quarterly, 40(2), 309
McLean G.G. (2008) A history of Backwell IXL, 1858 – 2008. Innovation and Enterprise
Reddy, A. C. (2004). Total Quality Marketing: The Key to Regaining Market Shares. Westport, CT: Quorum Books.
Statt, D. A. (2007). Concise Dictionary of Business Management. New York: Routledge.
Zacharia, Z. G., & Mentzer, J. T. (2007). The Role of Logistics in New Product Development. Journal of Business Logistics, 28(1), 83