Kudler's Strategic Choice and Evaluation - Case Study Example

RUNNING HEAD: KUDLER’S STRATEGIC CHOICE AND EVALUATION Customer Inserts His/her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name 18/05/ 2011 Introduction Strategic choice is a key element in the strategy formulation process. It is simply the decision to select among the grand strategies considered, the strategy which will best meet the enterprise’s objectives. The decision involves focusing on alternatives, considering the selection factors, evaluation of the alternatives and then making the strategic choice. The evaluation process helps to reduce the burden of the strategists while selecting the strategy. Kudler Fine Foods (KFF) is a company that is committed to providing their customers with the finest selection of the best quality foods and wines. KFF’s strategic plan implements tactics that enable it to hold to its mission while gaining a competitive edge within the gourmet food industry (Wilson & Gilligan, 2005, p. 11). Kudler Fine Foods is a gourmet grocery that has experienced significant growth and is now focusing on expanding its services, customer purchase cycle as well as improving the efficiency of its operations. In order to grow more rapidly, Kudler must consider some alternative strategies. The success of KFF will depend on its ability to adapt to changes in its internal and external environment. Because of the changes in the environment, the management must be able to understand and make strategic decisions (University of Phoenix 2011). Before choosing the best strategy or updating the existing one, Kudler must perform environmental scans. This will help them to forecast opportunities and threats that are likely to affect the current and future plans of KFF. Environmental scan will help KFF to monitor its external and internal environment. The company may use it to detect the major environmental issues such as technological, economic and social factors so as to carry out the SWOT analysis in Kudler’s competing industry (Alkhafaji, 2003, p. 80). Kudler Fine Foods should provide exceptional customer service because the store is customer-oriented. They should respond quickly to almost any need, from customizing a product to fulfilling special requests to create customer loyalty. Therefore, their strategic plan will include ways to sustain and retain their customers. The most vital element in the external element is the social factor and the identification of the major threats to growth and retention of customers. There are several alternative strategies that Kudler Fine Foods may consider to realize a steady growth. These strategies can be categorized under generic strategy, value discipline and grand strategy (Wilson & Gilligan, 2005, p. 387). Generic Strategy In order for Kudler Fine Foods to gain a competitive advantage in the food and drink industry, it has to look at the three generic strategies. These include low cost leadership, unique services through differentiation or focus on a particular market niche. The way in which Kudler Fine Foods position itself within the industry is a key determining factor. This means that even if it is operating at below average profitability, it can generate superior returns if it is well positioned. A firm positions itself by leveraging its strengths which follow under cost advantage and differentiation (Wilson & Gilligan, 2005, p. 390). The cost leadership strategy calls for being the lowest cost producer in an industry. The firm thus sells its products either at average price to earn a profit higher than that of rivals or below the average industry price to gain the market share. The objective of using this strategy is to gain the competitive advantage by keeping the cost of production or distribution lower than others in the industry. This strategy has really worked for KFF which has resulted to its rapid expansion to the other geographical locations. It offers its food products and drinks at favorable prices which has attracted more customers. Kudler has managed to lower their cost by increasing the efficiency of their operations. Moreover, they have adopted new technologies and production techniques that are cost effective. The differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers. That is, customers perceive them to be better and different from those of the competitors. KFF combine cost leadership with differentiation so as to remain competitive in the food and drink industry. Kudler is committed to providing the customers with the finest selection of the very best foods and wines. They frequently differentiate their products to suit the needs of the customers. They are taking the advantage of their technological advancement to improve on the quality of the products and services to customers (Wilson & Gilligan, 2005, p. 390). KFF has now become a retail store that provides a wide selection of gourmet foods all within one store. Furthermore, KFF has different departments which include baked goods, dairy, wine, cheese, sea foods, and fresh meats, organic and non-organic produce. It has been able to use differentiation to separate itself from competitors and help build reputation (University of Phoenix 2011). The focus strategy concentrates on a narrow segment and then tries to achieve either a cost advantage or differentiation within that segment. KFF has put more emphasis on the local customers making sure they are fully satisfied in order to build customer loyalty. They have adopted the frequent shopper program that monitors the purchase behavior patterns of the customers. Value Discipline This is a strategy centered to deliver superior value to the customer. It is a strategy that sometimes surpasses the generic strategy of differentiation in its ability to promote effectiveness and result maximization. There are three common value disciplines which include operation excellence, customer intimacy and product leadership. Without operational excellence, it would be hard for KFF to realize growth and offer diverse product and services to their potential customers. Customer intimacy is a strategy that is coupled with differentiation strategy to offer tailored offerings or product and services that fit the customers as well as the needs of the identified niches. The third value discipline explains the rise of KFF and the fall of the other food companies in the industry. Product leadership is associated with the product attributes and the pricing strategy adopted by a given company. KFF has the best value disciplines which range from customer care to customer satisfaction through highly differentiated and well priced products (Wilson & Gilligan, 2005, p. 388) Grand Strategy This is a unique package of long term strategies. Kudler Fine Foods will pursue grand strategies of concentrated growth, market development and diversification in products and services. The concentrated growth is the least risky and the best grand strategy. This is the strategy where a firm directs its resources to the growth and development of a single product, in a particular market and with a single dominant technology. KFF can increase its market penetration through successful implementation of the concentrated growth strategy. Moreover, the strategy can help KFF to increase the number of repeat buys from customers and their user rates. Another strategy common with KFF is optimization of network. Through employing this strategy, Kudler has managed to penetrate into the three local regions with US and also internationally to countries like Italy (Wilson & Gilligan, 2005, p. 389) Recommended Strategies There are several other strategies or combination of strategies that KFF should implement as well as improve on the existing ones. The most important is flexibility since the market where Kudler operate is very dynamic and with high levels of uncertainties. Flexibility means the ability to change direction quickly and at low cost subject to certain unanticipated changes in the competitive situation within which a firm is operating (Alkhafaji, 2003, p. 409). KFF could also use internet to promote e-commerce whereby the customer order and make payment for the products and services online. This strategy is likely to increase their efficiency as well as save time for the customers. Conclusion Kudler Fine Foods model can be seen as innovative and creative on every side of its operation. By adopting some generic and grand strategies, KFF has been successful even through harsh economic times and stiff competition. However, it needs to employ the porter’s model to analyze so as to be more competitive. Major changes in the external environment occur when the operations of the firm in the industry becomes more competitive. Through environmental scan, Kudler’s Executive management team will stay informed and understand the industry standards, trends and forecasts. This will eventually help them in the development of a stronger and effective strategy. Evaluating the internal environment on the other hand will help KFF in determining their strengths and weaknesses (Alkhafaji, 2003, p. 80). References: Alkhafaji, A. F. (2003). Strategic management: Formulation, implementation, and control in a dynamic environment, New Delhi: Routledge. From http://books.google.co.ke/books?id=qJ014H-YbdgC&printsec=frontcover&dq=Strategic+management:+Formulation,+implementation,+and+control&hl=en&ei=lJS5TaGnMYPNhAf47cT3Dg&sa=X&oi=book_result&ct=result&resnum=2&ved=0CEAQ6AEwAQ#v=onepage&q&f=false Kudler Fine Foods Strategic Plan. Retrieved May 18, 2011. University of Phoenix STR581 From http://www.bukisa.com/articles/399608_kudler-fine-foods-strategic-plan-university-of-phoenix-str581 Wilson, R. M., & Gilligan, C. (2005). Strategic marketing management: planning, implementation and control. London: Butterworth-Heinemann. 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