1. Outline
Fresh Direct
Case (Questions are 10 points each)
Important Note: Please type your answers because hand-written answers will not be accepted as valid and will not be graded!!!
Question 1 (Chapter 2: General Environment):
1a. Identify what Fresh Direct's primary industry is online produce and
grocery stores.
1b. Identify who Fresh Direct's direct competitors are Trader Joe’s,
NetGrocer, and Peapod.
1c. Identify who Fresh Direct's indirect competitors are Wal-Mart, Food
Lion and Kroger.
1d. Based on the Fresh Direct case, identify 12 general environmental trends/changes that could drastically influence FreshDirect's Industry.
Make sure that you pick at least one trend from each segment outlined below. When providing your answers please use the following format:
Each trend is 1.5 points, totaling to 10 points for Q1.
General Environment Analysis
How do these trends/events/changes
Trend/events/changes impact the industry?
Segments
(list at least 1 trend/event for each
category) Positive and/or negative explain why?
negative & positive
Greater disparity among income is a
negative because people who are earning
less are not willing to spend more on this
type of service. It can be a positive for those
who have more money because they have
more disposable income
Demographics
1 greater disparity among income
2 Distribution of population (--)
this is a negative because
FreshDirect only delivers to
certain neighborhoods in New
York and certain states
Fresh Directs online business
will allow them to place
orders online before work or
during their lunch hour. This
will ensure the timely arrival
of the groceries when they
arrive from work and are

2. getting ready to prepare
dinner for family.
Sociocultural 1 More women in the work place (+)
2 The packages that are received by the
customers can't be returned for recycled
use (--)
citizens that are
environmentally friendly
will see this trend as a
negative because no
recycling is being done
Political/legal
1 Discrimination against certain
neighborhoods (--)
discrimination is illegal in
the United States
2 Fresh Direct delivers to people’s homes (+)
This is good for disabled
citizens who are protected
by the ADA which looks to
benefit the good of
disabled citizens
Technological
1 emergence of the internet, wireless
communication and the personal
computers (+)
These technologies allows
the consumers to visit
Fresh Direct online to
place orders.
2 Conveyer belt system (+)
Allows Fresh Direct items
to be shipped out quickly
to customers
Economic 1 a recession (--) (+)
People are reserved with
spending but rather eat-in
instead of going out to eat
2 people are spending less (--)
People are not willing to
pay the extra fee for
delivery
Global 1 Fresh Direct does not deliver globally (--)
They are not a global
brand name which does
not boost their revenue
2 Fresh Direct makes foreign dishes (+)
Fresh Direct caters to
different cultures taste

3. Question 2: Conduct a SWOT analysis for Fresh Direct. Please be short and precise in your answers (follow the format
provided below). Please avoid general and round statements in answering this question.
Point System: Each correct point is 1 point (0.25 for the point, 0.75 for the justification), totaling to 10 points for Q2.
Strengths (4
major strengths)
(Explain in 2-3
sentences why it is
a strength)
Weaknesses (2
major
weaknesses)
(Explain in 2-3
sentences why it
is a weakness)
Opportunities (2 major
opportunities) (Explain
in 2-3 sentences why it is
an opportunity)
Threats (a 2 major threats)
(Explain in 2-3 sentences
why it is a threat)
1.Reducing real estate
costs could potentially
have operating of up to
10 percent rather than
the 3 to 4 percent of
traditional
supermarkets.
1. Customers in many
cases, were unwilling
to pay extra to online
grocers for the
convenience of home
delivery.
1. The MARC group study
concluded that consumers
who buy groceries online are
more loyal to their electronic
supermarkets. Fresh Direct
could take advantage of
offering coupons and
premiums that other
companies do not offer.
1. Product spoilage is a major
threat if consumers are not willing
to spend the extra amount to
purchase online, delivered goods.
2. Fresh Direct’s profits
depends heavily on
creating a high volume
of customer traffic and
rapid turnover,
especially for
perishables such as
produce and fresh
meat.
2. Sales volumes and
profit margins
remained too small to
cover the high costs. .
2. Fresh Direct has the
opportunity to expand to
different populous cities up
north to try and boost
revenue.
2. FreshDirect former CEP Dean
Furbush said that Whole Foods or
Traders Joe’s moving into a Fresh
Direct neighborhood was the
biggest threat as that hurt Fresh
Direct the most.
3. Fresh Direct
provided dedicated
corporate account
managers and
customer service
representatives for
corporate clients
4. Fresh Direct’s web
site not only offered an
abundance of products
to choose from but

4. they also provided a
broad spectrum of
information on the
foods that was sold
Question 3 (Chapter 2: Competitive Forces): a) Conduct a Porter’s Five-Force analysis for Fresh Direct. Please use the
following framework to answer this question (You can use the template I provided for your 4th class assignment—it can be
found on blackboard under the “Assignments” tab).
Point System: (a) Each force is 2 points (b) part of the question is 2 points, totaling to 10 points for Q3.
5-Forces Circle/Bolded One Why (Explain the reason(s)? Your justifications
should be based on your Assignment #4.
Threat of New Entrants Low/Moderate/
High
The threat of new entrants is low due to high start up
prices and the demand for this industry is low.
Threat of Substitutes Low/Mod/ High The threat of substitutes is high because consumers can
find products that can replace Fresh Direct’s and find
service with quality, price, convenience and functionally
Buyer Power Low/Mod/ High The buyer power is high because they can easily become
their own supplier if they were to purchase a farm that is
ran by their supplier. This is only if they have the funds
to do so.
Supplier Power Low/Mod/ High The supplier’s power is high because they can become
their own retailer, because they have the products that the
retailer sales. More than likely this will not happen due
to the buyer-supplier relationship Fresh Direct has.
Intensity of
Competition
Low/Mod/ High Intensity of competition is high because of slow industry
growth, there are low switching cost, and high exit
barriers.
b) Assess and explain Fresh Direct’s competitive position in its respective industry (favorable/not favorable) based your 5-
Force analysis findings. Your justifications should be consistent with what you have found in Assignment #4.
Non-favorable because the industry growth is slow and consumers can easily substitute Fresh Direct’s items.

5. Question 4(Chapter 3):
a. Draw Fresh Direct’s Value Chain (2 points).
b. Analyze Fresh Direct’s internal environment by using the following outline (8 points).
Value Chain Activities
(1)
Main Question
(2)
Explain below: How it is done / performed in Fresh Direct?
Hint: Your answer should answer the main question asked
in the 2nd column for each value-chain activity.
Primary:
Inbound logistics Main Question: How does
Fresh Direct transport
supplies from suppliers to
the operations or the
production area?
The transportation of the supplies to the suppliers are via JIT. Just In Time is a process
Where the suppliers skips the warehouse and items are
directly received to the operations center.
Fresh Direct’s products are directly ordered from the individual grower, dairies, farms,
and it’s shipped directly to their operations center.
Operations Main Question: How does
Fresh Direct transform input
(supplies) to output?
They have a state-of-the-art establishment, which is 300,000 square foot production
center that has 12
Separate temperature zones ensuring that each piece of food was kept at its optimal
temperature for ripening and/or preservation. Then they are boxed up for the consumer
for output.
Outbound logistics Main Question: How does
Fresh Direct transport
finished goods from
operations to the finished-
good warehouse or
customers?
They have two delivery methods; if you are within the city then FD own delivery trucks
will delivery your groceries, but for consumers in the suburban areas Fresh Direct sends a
refrigerated delivery truck, which holds up to 500 orders, to their customers’ homes. Also,
with the refrigerated trucks, FD offers the consumer an option of delivery to their jobs so
when they are off work they can pick up the groceries in the parking lot of their job.
Marketing and Sales Main Question: How does
Fresh Direct price,
distribute, and promote its
products?
Price: Fresh Direct buys products directly from the source and pass the savings on to
their customers by cutting out the middle man in the process. In Comparing to
other online grocers and supermarkets. They offer frequent sales and limited
time deals to increase the value to their customers.
Distribute: Food That Comes Straight from the Farm, Delivered to the customers
home by truck or refrigerated carrier.
Promote: The company is promoted through online offers, word of mouth,
direct email listing, celebrities, and billboards.
Product: with Fresh Direct you can buy bulk items and family packs at club store prices.
They offer Fresh organic, all-natural and locally-produced foods. And they guarantee
you’ll “Get Exactly What You Want, Exactly How You Want It”.
Service Main Question: How does The web site is very user friendly and simple to use. They offer customer log

6. Fresh Direct provide after-
the-sales customer service to
its customers?
in so that you may review your previous selections and select favorite
products repeatedly for purchase. Convenient Delivery Options are also
available, All Delivered to Your Door for Less than
normal shipment in your area. Our friendly staff delivers your groceries in our
refrigerated trucks with perfect temperature control. Fresh Direct also
offers more convenient delivery times with delivery fees that are up to 30% less.
When delivery takes place the rep. can stock the refrigerated foods for you.
If there are any problems or issues with an order Fresh Direct offers
a Help site to answer any questions, provide direction for returns, and to also put
you in connection with the correct people in your area to assist you.
There is also a number to call for any questions or concerns
Secondary: Secondary:
Procurement Main Question: How does
Fresh Direct manage its
supplier relationship and
manage its buying
operations?
Freshdirect utilizes local farmers and food suppliers close to the delivery point to insure
It’s company promise for freshness and to keep the price as low as possible.
The buying operations are kept simple and small along with purchases to
ensure the non-use of a warehouse purchase.
Technology
development.
Definition: How does Fresh
Direct develop and diffuse
technology within the
organization?
Fresh Direct developed a website that customers could take a pictorial tour, get background
Info. On the experts who managed each dept. & get nutritional information on food. They
Also use a computerized conveyer system that sorts, assembles and packages items. Fresh
Direct implemented a SAP manufacturing software system that controlled every detail of
The facility’s operations.
Human resource
management
Main Question: How does
Fresh Direct hire, fire,
motivate, and compensate
its employees?
Beginning salaries at Fresh Direct were just above $7 and the average pay was around
$8.50. The company also provided its employees with generous benefits.
General Administration Main Question: How does
Fresh Direct’s top
management operate in
terms of providing a vision
for the organization, funding
financials resources, and
coming up with appropriate
strategic plans?
Fresh Direct started in 2001 and was funded by private sources and a training grant. Their
strategic plans were implemented to satisfy the goal of giving their customers “higher
quality at lower prices.” In doing this the company created a state-of-art production center,
and bought directly from suppliers. Fresh Direct also uses their quality management and
system efficiency in their organization to provide their organization with a vision of who
they are.
Question 5 (Chapter 3)
4. By using the following format, please

7. a. Identify Fresh Direct’s important resource/capabilities (column--0.5 point each)
b. Conduct V-R-I-S analysis (columns 2, 3, 4, & 5 --0.25 point each)
c. Decide what type of resource/capability it is (column 6 --0.5 point each), totaling to 10 points for Q4.
Resource/
capability
(Column 1)
Is it
Valuable?
(V)
(Column 2)
Is it rare?
(R)
(Column 3)
Is it difficult to
imitate? (I)
(Column 4)
Is it difficult to
substitute? (S)
(Column 5)
Does it provide
a. Competitive Disadvantage (No- No-No- No)
b. Competitive Parity (Yes-No-No-No)
c. Temporary Competitive Adv. (Yes-Yes-No-No)
d. Sustainable Comp. Adv.? (Yes-Yes-Yes-Yes)
(Column 6)
For each
resource/capability, list
the names and offer 1-3
sentence explanation
for each one of them.
Yes/no why? Yes/no
why?
Yes/no why? Yes/no why? Pick a, b, c, or d based on your answers
for columns 2, 3, 4, & 5
Tangible Resources
1. JIT operations Yes, because it
enables the
company to get
rid of the
middleman &
get their
supplies straight
from the
supplier which
enables them to
receive
discounts and
pass those
Yes. Their
competitors
usually get
their supplies
from another
facility that
has a
contract with
the supplier.
Because of
this Fresh
Direct has a
competitive
advantage
No. This is not
difficult to imitate
because other
companies could
buy directly from
their suppliers.
No. It is not difficult to
substitute because
organizations can buy
from a third-party
instead of straight from
the supplier.
Temporary Competitive Advantage
2. Production Center Yes. The
production
center is
valuable
because it was
in a 10-mile
radius of its
customers. It
held all Fresh
Direct’s
products.
No. Many
companies in
this industry
have a
production
center and
not a
physical
store.
No. It is not
difficult to imitate
because other
organizations have
this feature.
No. It is not difficult
because companies
have the option of
having a physical store
that the customers can
buy their items from.
Competitive Parity
Intangible Resources

8. 1. Reputation The
Business has a
track record of
delivering on its
strategic objectives
Yes Yes Yes Yes Sustainable Competitive Advantage
2. Reliable service Yes No, other
online stores
can provide
the same
reliable
services to
their
customers
No, the
competition can
always deliver in a
timely manner as
well as offer great
customer service
to draw customer
attention.
No, the consumer can
go to another company
if Fresh Direct does not
obtain their brand
loyalty and low
switching cost
Competitive Parity
Capabilities
1.Supply System- They
have eliminated the
“middleman” which allows
them to offer high quality
products at low prices.
Yes Yes Yes yes Sustainable Competitive Advantage
In order to answer the 6th
column (above) please use the template below as an aid.
Criteria for Sustainable Competitive Advantage and Strategic Implications

9. Valuable Rare Difficult Difficult to Implications
to Imitate Substitute for Competitiveness
No No No No Competitive Disadvantage
Yes No No No Competitive Parity
Yes Yes No No Temporary competitive
Advantage
Yes Yes Yes Yes Sustainable competitive
Advantage
Is a resource or capability you identified above …

10. Fresh Direct Case Study Analysis
Organized by
Jobyna Terry
Natasha Moon
Ashley Oliver
LaQuisha Hill
Amber Byrd
Jermon Hill
Submitted to
Professor Colakoglu
09/30/2010