The Concerns of the Company Ice Fili - Essay Example

In the finest ice cream producer category, there is Baskin & Robbins and Haagen Dazs. The substitute products include beer, soda, yogurts, chocolate, and other confectionary candies. As opposed to the falling tendency found in the Russian ice cream industry, the beer, soft drink, and confectionery industries enjoy increasing market demand. This indicates a preference shift of the market from ice cream to these substitute products. Given such a competitive ice cream market scenario in Russia, the case of Ice Fili assumes further significance. (Rukstad, Wells & Yin, January 22, 2007, p. 1)

The short-term and long-term corporate goals of Ice Fili are almost similar as both deals with competitors. The short-term goals are to stay viable in the Russian ice cream market and to sustain the place of a market leader. The long-term goals include acquiring market share surpassing the competitors and distinguishing its products. With these corporate goals and the concerns of the company in mind, the case is being analyzed with a view of recommending solutions that will help Ice Fili overcome its concerns and achieve its goals.

External Analysis:
The external analysis involves the analysis of the external environment of the company. It consists of economic and industry analysis.
Economy:
The analysis of the Russian economy involves three phases. These are discussed below:
i. The first phase was prior to the dissolution of the Soviet Union- that is before the year 1991. During this time, the state-controlled planning, production, and distribution of food products. Under this state-run system, companies like Ice Fili were responsible only for the production and storage of ice cream. The other activities in the value chain were taken care of by the state. Ice cream production capacity increased substantially during this time as the alcohol factories were reassigned to the production of ice cream as a part of the then Soviet Union President Michail Gorbachev’s anti-alcohol campaign.

ii. The second phase was the post year 1991 and before the year 1998. During this time the political and economic situation was extremely unstable and the Soviet Union was dissolved. There was a marked shift from a state-run economy to an open market economy that was characterized by competition through privatization and price liberalization. As a result, foreign ice cream companies like Ben & Jerry’s, Baskin Robbins, Nestle, and Unilever entered the Russian ice cream market. These economic changes paralyzed domestic producers like Ice Fili. Since these domestic companies were responsible for only manufacturing and storage of ice cream thus far, the rest is taken care of by the state, they found it extremely hard to update production technology, modernize infrastructure, develop better marketing and packaging solutions, develop dealer and distributor networks and create new distribution channels so as to compete with their foreign counterparts.

iii. The third phase consisted of the financial crisis of 1998 when Russia defaulted on its debt payments. It resulted in a financial breakdown and consequent devaluation of the ruble. The foreign companies thus became skeptical of the Russian market and reduced their imports. As a result, the domestic ice-cream manufacturers had to quickly reduce their reliance on imported materials used for ice cream production and had to become self-sufficient. (Rukstad, Wells & Yin, January 22, 2007, p. 2)