Summary of Eurofreezes Strategic Position - Case Study Example

? STRATEGIC OPTIONS Short summary of Eurofreeze’s strategic position Generally, the strategic position of Eurofreeze refers to a summation of the intended objectives and goals of the company and the approach the company plans to use in achieving these objectives and goals (Haas and Kleingeld, 2009). In this regard, the strategic position of Eurofreeze can be summed up in two major themes, which are expanding in its market and profit shares and establishing brand equity. In the first instance, the goal of the company to increase its market share from what it previously has to one that is profit intensive and profit based is clearly spelt out in their objective of favoring products with more added value and higher profit margins like pizzas (Amponsah, 2009). Indeed, in marketing theory, goals set are always the higher ambitions whiles the objectives are the specific activities to take to realize the goals. So in the case of Eurofreeze, it has clearly spelt out a goal of increasing its market share and profit margins but the surest way that the company seeks to achieve this is by giving much attention to products that the company considers to be of commercial value. The above summary could be briefed in SWOT analysis for Eurofreeze. As part of the strengths of the company, it would be identified that the company presently have a very rooted knowledge in freezer technology, which is a major requirement for survival in the industry. Again, the company has a buying function with which it purchases vegetables and fruits directly. Even more, the company has successfully developed a well known branded food product. Regardless of the strengths, a number of weaknesses mitigate against the company, including the fact that its market share is presently far lower than its key competitor (Adams, 2011). Again, Eurofreeze has not been able to provide the one market-leading frozen brand that its consumers wanted. In the midst of the weaknesses, there is an opportunity in the recovering global economic recession, which gives opportunities for the company to undertake foreign direct investments in markets where its major competitor does not have commanding market share. Finally, the company is faced with a number of threats including the fact that the market leader, which is Refrigor offers is a low-cost leader. Again, refrigerator space in most supermarkets in markets in the United Kingdom and other places are giving space only to their own brand of products. Lastly, the marketing strategies and plans used by Eurofreeze is relatively the same as that of competitors (Haga and Marold, 2004). Development of Scoring Criteria Based on the SWOT Analysis performed earlier, a number of criteria can be developed for scoring each option available to the company so that the best option can eventually be selected. These criteria are grouped under three major themes namely suitability, acceptability and feasibility. Scooping through the SWOT analysis, some of the major criteria that can be used include the following: The grouping of the criteria according to the three themes are thus given as follows: Suitability Criteria 1: Growth and Investment: This criterion is selected as a long term strategic plan for the company towards taking advantage of its opportunities and using them according to its advantage. Without growth and investment, the company cannot utilize its opportunities of a generally improving global economy that makes foreign direct investment a lucrative venture. Criteria 2: Brand equity: Brand equity will be established over a long term basis. It is therefore relevant in pushing up the company for its long term ambition of becoming a market leader. With a brand equity, publicity on all products and services of the company will be reduced because customers would have a lot to know about the company in advance. Feasibility Criteria 3: Value adding: This criterion has been selected to overcome the weakness of the company identified as having a very low market share. With value added service and product, it is hoped that the company will become the preferred choice for customer and its market share would subsequently increase. Criteria 4: High Return: High returns are expected on the present products and services that the company presents. What this means is that high return shall cater for a short to medium term strategic plan that aims at getting enough capital to run the company in the immediate term. Acceptability Criteria 5: low cost: Low cost is selected as one of the criteria to compete well against other major competitors. This is particularly important for products of the company that are displayed in other supermarkets, which have started producing their own brands. With low cost criteria, chances are that customers will still prefer products from Eurofreeze to that from other competitors. Scoring Matrix Based on the criteria and options given, the scoring matrix below is developed for further selection of one of the options for Eurofreeze to build on. CRITERIA Criteria 1: Growth and Investment Criteria 2: Brand equity Criteria 3: Value adding Criteria 4: High Return Criteria 5: low cost OPTIONS 1: stop selling branded and own label vegetables and fruits 2: stop selling branded vegetables and fruits but continue own label 3: extended specialist branded food ranges 4: Major cut down in range in first two years, then build specialist area from 4 years onwards 5: Become lowest cost producer through major investments OPTIONS CRITERIA A B C D E 1 3 3 4 6 4 2 1 9 3 5 5 3 4 4 2 9 6 4 5 7 7 8 3 5 4 5 3 5 6 TOTAL 17 28 19 33 24 A strategic statement for selected option The selection of an option based on which the present strategic statement is being created is based on five major outlines. The first has to do with the statement of major goal for Eurofreeze, which could be stated as an ambition of becoming the largest and highly patronized vegetable and fruit storage company in its sector of operation. The selection is also based on the statement of the overall direction of the company, which deals with the medium to long term strategic direction of the company. In this regard, the overall direction of Eurofreeze could be stated as one that follows the organic growth principle. By the organic growth, reference is being made to the selection of a growth direct that frowns on options like mergers and acquisition but rather incorporates business growth through increases in total customer base and output per customer. This leads up to the third outline, which is the statement of competitive bases for the company. As part of the option that will be selected at last, there must be a consideration of a statement of competitive basis that looks at low cost. Furthermore, there is the statement of principal means, which the company would seek to use the energy efficient storage systems; use of electronic commerce; and the constant sharing of cost. Again, this is going to be influential in the selected option because options that rote for the use of conservative storage facilities must be overlooked. Finally, there is the issue of statement of resourcing basis, of which the company would use the balance leverage. Of the five strategic options available to Eurofreeze and the five outlines stated above, it is strongly recommended that the company pursues the forth option, which entails undertaking major cutback of range in first two years, then rebuild specialist areas from 4 years. The reason for the selection of this strategic option is that it is more focused on a long term basis whereby the company will be seeking to overcome its key competitor, who is Refrigor on a very gradual but highly proactive manner. By this, reference is being made to the fact that the company will have enough time to structure and program its long term plans to become a market force (Englen, 2009). It is for this reason that the financial and sales implication for this particular option has it that the company would at the very initial stages record some decline in sales till after the third year when specialist rebuilding will be complete. Indeed, for the fact that this option focuses on a long term plan makes the strategic option highly sustainable and achievement (Huy, 2005’ Department of Defense, 2008). In between the first and the fourth year where profit margins have not started growing up, it is highly recommended that the company will put much of its focus on an in-house restructuring program that will prepare the human capital base of the company for the intended market take over agenda. Part 2 The non-prescriptive approach to strategy formulation suggested for Eurofreeze, use shall be made of the alternatives to the classic prescriptive approaches, suggested by Mintzberg, Ahlstrand and Lampel (1998). In these alternative approaches, four major simultaneous approaches are suggested namely survival base route, uncertainty base route, networking base route and learning base route. For Eurofreeze, a survival base route would be looking at mechanisms put in place to rightly identify robust competitors and surviving against these competitors. The basic principle that would stand therefore would be the principle of survival of the fittest. For an uncertainty base route, the focus shall be on the external environment, where factors accounting for uncertainty, opportunistic and transformational processes shall be identified and strategized against. Because such factors may lead to lost of control for management, it is important to take small steps for the adaptation of strategies as they unfold. The third approach is the networking base route, which lays its emphasis on networking three major outlines namely human resource aspect, network aspect and competitive game. The option is named networking base route because all three outlines are used together to complement each other. The final option is the learning base route, which deals with learning from the company’s past experiences to peg a strategic plan against competitors. Of the four however, the survival base route is suggested. This is because of the competition that exists of Eurofreeze in the shape of Refrigor. Even though there may not be as many competitors as possible, the fact that Refrigor has developed a very firm brand equity in the industry puts Eurofreeze at a position, where it would best compete as an underdog and thus a company at risk for survival. Once this is done, there will not be any forms of complacency by the company. REFERENCE LIST Mintzberg, Ahlstrand and Lampel (1998) ‘Strategy Safari Adams R. T 2011, Organs of Organizational Growth and Strategic Development. London: Alpha Press Limited Amponsah T. A 2009. Agents of Organisational Growth and Development. 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