This document discusses a strategic analysis of Ice-Fili, the largest domestic ice cream producer in Russia. It analyzes Ice-Fili's industry and competitive environment using Porter's Five Forces model. It finds that buyer power and threat of substitutes are high for Ice-Fili due to many choices for customers and competition from other foods. The document also segments the Russian ice cream market and recommends that Ice-Fili focus on strengthening its distribution channel and brand recognition to regain market share from foreign and regional competitors that have eroded Ice-Fili's leadership position.
The carbonated soft drink (CSD's) industry was dominated by Coca Cola and Pepsi vying for market share. The CSD organizations gained market share in the U.S. and in global markets extending their brandsโ recognition and capturing sales from new markets. The shift in consumer beverage preference and the expansion into global markets proved to uncover new opportunities for growth and profitability. In addition the changes in the organizational structure of business for these companies have allowed them to sustain growth beyond CSDโs.
The carbonated soft drink (CSD's) industry was dominated by Coca Cola and Pepsi vying for market share. The CSD organizations gained market share in the U.S. and in global markets extending their brandsโ recognition and capturing sales from new markets. The shift in consumer beverage preference and the expansion into global markets proved to uncover new opportunities for growth and profitability. In addition the changes in the organizational structure of business for these companies have allowed them to sustain growth beyond CSDโs.
PepsiCo, An analysis of the strategy and parenting advantageVladimir Pushmin
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Analysis and evaluationof the PepsiCo corporate strategy and assessment of whether this corporate strategy provides any parenting advantage to any of the businesses part of the corporate enterprise when compared to other buisiness models
This presentation contains the following for Eileen Fisher, Retail Fashion Brand:
Problem Statement
Decisions to be Made
Company Introduction
POP and POD
Competitive Advantage
Brand Elements
Re-positioning Strategy
Keller Model
PepsiCo, An analysis of the strategy and parenting advantageVladimir Pushmin
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Analysis and evaluationof the PepsiCo corporate strategy and assessment of whether this corporate strategy provides any parenting advantage to any of the businesses part of the corporate enterprise when compared to other buisiness models
This presentation contains the following for Eileen Fisher, Retail Fashion Brand:
Problem Statement
Decisions to be Made
Company Introduction
POP and POD
Competitive Advantage
Brand Elements
Re-positioning Strategy
Keller Model
Research and development manager performance appraisalremus853
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Research and development manager job description,Research and development manager goals & objectives,Research and development manager KPIs & KRAs,Research and development manager self appraisal
De Beers Consolidated Mines has successfully managed the global diamond industry for many decades, propping up prices at all stages of the value chain, reducing price volatility and increasing consumer demand. By the end of the 20th century, however, a series of forces threatened De Beer's role and profitability. New diamond mining firms were selling their production on the open market rather than through De Beers' Central Selling Organization. Can De Beers strategy beat their competitors and what was the competition situation? Find out, more in this presentation.
The report was prepared to identify the core problems of aggressive or viral marketing done by a premium icecream brand called Bellissimo and to come up with recommendations to rebrand the strategy.
China's chemical market is the world's largest which currently faces production overcapacity, slow growth of local demand, and high competition intensity. In this white paper, Solidiance addresses the questions on how to grow and maintain market position as many emerging competitors are moving up to the value chain through product upgrade, continuous innovation, and business expansion.
The answers are โThe New Chemical Era in Chinaโ which will come up as the phenomenon resulting from the ability of different chemical companies to create their market identities to gain competitiveness.
This phenomenon is expected to gradually open new opportunities in development of different industry sectors, such as automotive, energy, construction, as well as electrical & electronic (E&E).
SWOT Analysis Most of the people have a high taste for ice cream.docxdeanmtaylor1545
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SWOT Analysis
Most of the people have a high taste for ice cream, which is the reason as to why a business idea of opening a gelato shop is a great one. However, due to the fact that this may not necessarily be the only gelato shop in Las Vegas, it is essential to carry out SWOT analysis for the explanation and identification of the different factors that may affect the operations of the gelato shop. The SWOT analysis will involve the identification of the strengths of the business, the weaknesses, the opportunities as well as the threats that could negatively affect the gelato shop.
Strengths
One of the strengths of this proposed gelato is the ability to provide unique flavors, which means that it will be easy to attract new customers. Ability to devise and introduce new flavors in the market can be helpful in attracting new buyers, due to the fact that people may tend to change their taste and preference by trying a new product. This will mean that more customers and buyers will be attracted. Additionally, the geographical location of the gelato shop is suitable due to the availability of ready market. Rationale for this assertion in the Las Vegas the population is high, a clear indication of the market and the locality of the shop in an airstrip will mean more consumers and customers (Sousa, Antonialli, Pereira, Ribeiro, Pires, Moreira & Pereira, 2019). Moreover, this gelato will have little fat content which means that it will be healthier when compared with other related products.
Weaknesses
One of the identifiable weaknesses is the lack of skills and the experience in the management if gelato shop, which means that difficulties may be experienced in the process of management. Another challenge is that introduction of gelato as a new product needs the educating of consumers, implying that people tend to be reluctant in trying new products. The other weakness is that vendors supplying the ingredients may tend to be unreliable or even hike prices anytime, which may be an extra cost incurred. As well in the event of delays by the suppliers of the ingredients, inconveniences may result into the losing of customers.
Opportunities
The most notable opportunity of the gelato is ability to provide unique product, that is free from nuts which is completely new into the market. For the purposes of increasing the sales, prepackaging will be done which will enable the portability of the gelato different places such as home or even to offices. The ingredient used for the gelato that is chocolate is preferred for health benefits creates new opportunities for the gelato. Additional opportunity is that new geographical areas will provide a ready market. Basically, the greatest opportunity for this gelato shop is the unique nature of its product and the health consideration of the ice cream provided.
Threats
The gelato shop will face the threats of competition from the shops providing the same product or even related products such as stores of yoghurt.
Business Unit Analysis Directions Create a Feasibility St.docxRAHUL126667
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Business Unit Analysis
Directions: Create a Feasibility Study for Harley-Davidson using the following outline:
Part I: Differentiation Strategies
The analysis of current strategy and competitor analysis you conducted last module impressed the
senior vice president. She now needs you to delve into the brands and analyze them by conducting a
business unit analysis and presenting your findings in a three-part PowerPoint presentation.
Research the Harley-Davidson (H-D) Web site for each brand and review the annual report for relevant
details of the size, scope, target market, services and amenities, and other salient points of
differentiation. Include these details in Part I of your PowerPoint presentation.
From the research and analysis of the business units, identify:
โข A description of each brand that provides a clear picture of the brand and its place in the overall
portfolio of Harley-Davidson.
โข The target market of each brand.
โข How the brands are alike and how they differ.
โข A preliminary analysis of any gaps that exist in the portfolio that might lead to opportunities to
add to the brands.
โข Your analysis of possible merger/acquisition/joint venture possibilities and what would be
achieved or accomplished through the merger/acquisition/joint venture.
Part II: SWOT Analysis
Perform a SWOT analysis for Harley-Davidson and include this information in Part II of your PowerPoint
presentation.
โข Based on the internal analyses of the SWOT analysis, assess the functional areas, resources,
capabilities, and strengths H-D possesses. Please be sure to cover the following functional areas
in your assessment:
o Marketing: New product development, integrated marketing planning,
marketing communications, and building customer loyalty.
o Operations: Quality, service, and consistent execution.
o Human Resources: Hiring, training, developing talent, and performance
planning. Avoided lawsuits and bad PR due to its hiring practices. Is ethical in its
HR practices.
o Executive Leadership: Industry knowledge and experience, vision about where
the industry is heading, and strategy execution.
o Supply Chain Optimization: Strategic sourcing of input, vendor management,
integrated IS, and joint forecasting with suppliers.
o Corporate Responsibility and Ethics: Concern for corporate citizenship and the
environment. Present any potential ethical concerns as well.
o Safety and Quality: How the motorcycle industry is dealing with safety and
quality issues.
Part III: Growth and Profitability Strategies
In addition, the executive board is interested in your ideas about bold strategies for the future. The
strategies you recommend will have to contribute to growth and profitability, as outlined in the Annual
Report.
You will want to pay special attention to exploring vertical integration, strategic alliances, and the
internal growth of new brands entering new geographic markets, and ...
Preliminary Business Plan Report Rubrics 1. CompletiTatianaMajor22
ย
Preliminary Business Plan Report Rubrics
1. Completing the table below: 10 points
Product Concept
Company Name
Company Home
Location
New International
Location
Similar Products in
market
Industry(ies):
2. Carry out SWOT analysis. 20 points
3. Subsequently, develop strategies on how to move internationally (i.e.
exporting, strategic alliance, subsidiary etc.). 30 points
4. Carry out QSPM. 30 points
5. Writing style and format. 10 points
CHAPTER 7
International Strategy: Creating Value in Global Markets
Copyright Anatoli Styf/Shutterstock
1
Learning Objectives
After reading this chapter, you should have a good understanding of:
7-1 The importance of international expansion as a viable diversification strategy.
7-2 The sources of national advantage; that is, why an industry in a given country is more (or less) successful than the same industry in another country.
7-3 The motivations (or benefits) and the risks associated with international expansion, including the emerging trend for greater offshoring and outsourcing activity.
7-4 The two opposing forces โ cost reduction and adaptation to local markets โ that firms face when entering international markets.
7-5 The advantages and disadvantages associated with each of the four basic strategies: international, global, multidomestic, and transnational.
7-6 The difference between regional companies and truly global companies.
7-7 The four basic types of entry strategies and the relative benefits and risks associated with each of them.
ยฉMcGraw-Hill Education.
2
International Strategy
(1 of 2)
Consider . . .
The global marketplace provides many opportunities for firms to increase their revenue base and their profitability.
However, managers face many opportunities and risks when they diversify abroad.
What should a firm do in order to create value and attain a competitive advantage in this global marketplace?
ยฉMcGraw-Hill Education.
The trade among nations has increased dramatically in recent years and it is estimated that by 2025, 45 percent of the Fortune Global 500 will be based in emerging economies, which are now producing world-class companies with huge domestic markets and a commitment to invest in innovation. This makes international expansion a viable diversification strategy. In a variety of industries such as semiconductors, automobiles, commercial aircraft, telecommunications, computers, and consumer electronics, it is almost impossible to survive unless firms scan the world for competitors, customers, human resources, suppliers, and technology. Firms need to know how to be successful and create value when diversifying into global markets. Some of the questions that need to be answered include: What explains the level of success of a given industry in a given country? What are some of the major motivations and risks associated with international expansion? How can firms handle the opposing forces of cost reduction an ...
An industry analysis by Porters Five Forces reveals that the soft dr.pdfalokkesh1
ย
An industry analysis by Porters Five Forces reveals that the soft drink industry has historically
been favorable for positive profitability, as exemplified by Pepsi and Cokes financial outcomes.
Soft drink industry is very profitable, more so for the concentrate producers than the bottler\'s.
This is surprising considering the fact that product sold is a commodity which can even be
produced easily. There are several reasons for this, using the five forces analysis we can clearly
demonstrate how each force contributes the profitability of the industry.
Threat of new entrants
Entering bottling, meanwhile, would require substantial capital investment, which would deter
entry.
although the CP industry is not very capital intensive, other barriers would prevent entry.
Through their DSD practices, these companies had intimate relationships with their retail
channels and would be able to defend their positions effectively through discounting or other
tactics.
It would be nearly impossible for either a new CP or a new bottler to enter the industry. New CPs
would need to overcome the tremendous marketing muscle and market presence of Coke, Pepsi,
and a few others, who had established brand names that were as much as a century old.
Companies that have a door to door distribution channel in place like snack companies could
choose to diversify into soda industry
Switching costs are low for consumers who risk very little by trying new brands or
Beverages
Barriers to entry are relatively high, though, with large advertising budgets and competitive
brand loyalty to big players like Coca-Cola and Pepsi
The drinks with high growth and high hype are non-carbonated beverages such as juice drinks,
sports drinks, tea-based drinks, dairy-based drinks, and especially bottled water
Bargaining power of buyers
through five principal channels: food stores, convenience and gas, fountain, vending, and mass
merchandisers (primary part of \"Other\" in \"Cola Warsรขโฌยฆ\" case)
Bottlers own a manufacturing and sales operation in an exclusive geographic territory, with
rights granted in perpetuity by the franchiser, subject to termination only in the event of default
by the bottler
1980 Soft Drink Interbrand Competition Act preserved the right of CPs to grant exclusive
territories to their bottlers, giving less bargaining power to Bottler\'s buyers because there is no
alternative supplier
Bottlers are locked into contracts that grant CPs the right to set prices and other terms of sale
Bottlers are allowed to handle the non-cola brands of other Cps at their discretion
Bottlers are also given freedom in choosing whether or not to carry new beverages introduced by
the CPs but cannot carry directly competitive brands
Competition for brand shelf space in retail channels gives some bargaining power back to buyers
Threat of substitute products
Through the early 1960s, soft drinks were synonymous with \"colas\" in the mind of consumers.
In the 1980s and 1990s Coffee, tea, water, juices.
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According to the latest report by IMARC Group, titled " Cosmetic Packaging Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2020-2025," The global cosmetic packaging market grew at a CAGR of around 5% during 2014-2019.
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A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
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Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
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Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
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Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
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Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
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Ice fili done
1. MGT 5794
Strategic Management
Spring 2006
Ice-Fili: Winning Strategem in a Contemporary Venue
-Team 5-
900-22-7377
904-46-8228
904-47-4673
904-50-0701
904-50-7922
904-52-3718
February 13, 2006
2. Executive Summary
Ice-Fili had been successful in the past, surviving various tumultuous times including the
transformation of the Russian closed economy into an open economy and the financial crisis in
1998. As Russiaโs largest domestic ice cream producer, they had held onto their market
leadership for many years. However, increasing competition from foreign companies, along with
the emergence of regional producers of ice cream led to Ice-Filiโs market share erosion in the
recent years. Porterโs five forces model was the primary method to analyze Ice-Filiโs industry
and its competitiveness in the industry. Segmentation analysis was used for further study of the
ice cream industry in Russia. The analysis was carried on key variables like distribution channel,
buying behavior, geographic locations, and product characteristics. Based on this model, various
alternatives were considered. From these alternatives, it was possible to form a recommendation:
Ice-Fili will need to focus on the strengthening of its distribution channel through various efforts
including marketing and raising of capital while focusing on its long history and brand
recognition. Above all, availability of its product to the consumers is the key to Ice-Filiโs
success.
2
3. Porters Five Forces
In order to analyze the industry and environment of Ice Fili, Porterโs five forces model
will be used to assess its competitiveness in the market. An illustration of the model specific to
Ice Fili is displayed in Exhibit 1. The analysis will lead to the identification of various
opportunities for Ice Fili, along with determination of the most appropriate strategy and
associated milestone for the strategy.
Buyers are people or organizations who create demand in an industry. If buyers have
significant bargaining power, industry returns can transfer to buyers in the form of lower prices.
Buyer power is determined by various factors such as switching costs, the relative volume of
purchases, the standardization of the product, elasticity of demand, brand identity, and quality of
the products. Buyers are presented with many choices when selecting a product in the ice cream
industry while distributors have the power to decide which products will be available to
customers. Absence of preservatives and a high proportion of milk fat differentiate the domestic
Russian ice cream from the foreign producersโ. However, due to a vast number of similar
products and the lack of protection for innovation leads to indifference between various domestic
products. Customers are able to substitute one brand of ice cream to another or from ice cream to
other foods altogether at any point in time. Pricing information is also readily available to
customers and only large differences in price will affect the customersโ buying behavior. It
should be noted that the buyers of ice cream for Ice Fili or any other ice cream producers are the
distribution channel members, not the end consumers. As such, it could be inferred that the buyer
power of the distribution channel members relative to the ice cream producers is high, and the
3
4. buyer power of the end consumers to the distribution channel members is also high. It could also
be implied that through this chain relationship, the end consumers also impose buyer power on
the ice cream producers.
The main suppliers in the ice cream industry comprise suppliers of raw materials or
ingredients and equipments. Factors affecting the bargaining power of suppliers include the
threat of forward integration and the concentration of suppliers. There exist numerous potential
suppliers of ingredients. The ingredients provided by each supplier are not unique or greatly
differentiated. Furthermore, ice cream manufacturers are able to switch between suppliers
quickly and cheaply. Therefore, the bargaining power of suppliers of ingredients is rather low. In
terms of the equipment, most of the equipment used by domestic ice cream manufacturers were
imported from other countries. Although the local supplier base has been developing rapidly,
approximately 10 ice cream equipment suppliers exist in Russia, Ukraine, and the Baltic
countries, which is relatively low compared to the total number of ice cream manufactories at
around 300. The suppliers of equipment are concentrated in this industry and make it difficult for
ice cream manufacturers to exercise leverage over the suppliers and obtain lower prices by
inducing competition among them. Furthermore, switching costs for large capital equipments are
high. Even though the development of new domestic equipment suppliers jointly financed by
Russian ice cream producers such as those converted from military facilities may present
opportunities for forward integration, the bargaining power of the suppliers of equipment is
relatively high compared to that of the material suppliers.
4
5. Barriers to entry deter new competitors from entering the market and creating more
competition for established firms. There are several major barriers to entry which include
economies of scale, initial capital requirements, product differentiation, cost disadvantages,
access to distribution channels, government policy, and competitorsโ responses The ice cream
industry has considerably low barriers to entry since most equipment can be rented, purchased,
or utilized for multiple purposes, while employees need not be highly experienced and trained.
Also, there are no unique ice cream manufacturing techniques or processes that are employed. In
general, brand loyalty presents a problem for new entrants because existing firms have already
marketed their products and possess a large number of loyal customers. A new entrant must
spend considerable resources in order to get their name out and convince consumers to begin
purchasing their products instead of what they previously used. However, due to IceโFiliโs weak
marketing and promotion, Russian customers tend to be indifferent consumers of ice cream
based on brand differentiation. Therefore, these non-loyal customers tend to switch from one
brand of ice cream to another rather easily. In terms of the product, there is low differentiation
and demand elasticity, contributing to a lower barrier to entry. The real threat originated from
regional producers. They tended to cut costs by taking advantage of lower wages. Regional
producers accounted for 30% of the domestic ice cream market. This was in part led by a
shrinking of the frozen food imports market, which had been impacted by the 1998 Russian
economic crisis. Many former frozen-meat and fish wholesalers found it easy to set up for ice
cream production since they could utilize their cold storage and production capabilities. By 2002,
these flexible and aggressive regional producers set up manufacturing factories and also
penetrated the ice cream market in Moscow. Regarding the accessibility to channels of
distribution, many channel members carried different brands of several companies, resulting in
5
6. easy access to various distribution networks for new entrants. Government policy encouraged the
entry of new competitors, including foreign companies. The open market economy attracted
more foreign companies into the Russian market to capitalize on new opportunities. Foreign
companies such as Nestle had already set up two factories in Moscow since the beginning of the
open economy.
A threat of substitutes exist when the demand for a product declines due to either lower
prices of a better performing substitute product, low brand loyalty, new current trends, or low
switching costs. When the threat of substitutes is low the outcome is favorable for the existing
industry because fewer alternatives exist. There is low customer switching costs in the Russian
ice cream industry. Furthermore, some other substitutes like beer, soda, yogurts, chocolates and
other confectionary candies are competing with ice cream products, threatening the already
declining ice cream market. In addition, such products are backed by fierce advertising
campaigns. As a result, the ice cream industry production shrank to 3.5% in 2000 from the
previous year, while beer was up 23% and soft drinks 25%.
6
7. Segmentation
Although several crucial segmentation variables exist for the ice cream market in Russia,
it should be realized that a superior market exists that encompasses not just ice creams but
frozen, dairy, confectionaries, and snacks such as candies. However, due to its resource
limitations including financial, marketing expertise, and human resources stemming from its
legacy of being in the closed economy of Russia, Ice Fili should initially focus on the ice cream
market. By dominating the ice cream market and developing it into a cash cow, various
opportunities could arise for Ice Fili to extend into a similar, yet broader market with higher
market demand growth (+8% for confectionaries) as opposed to the declining demand in the ice
cream market. (-3.5%)
As mentioned above, a number of segmentation variables exist for the ice cream market
in Russia. These include the distribution channel, buying behavior, geographic locations, and
product characteristics such as price. These variables were chosen based on the distinctiveness of
each segment. For example, the distribution channel was already clearly defined by kiosks, mini-
marts, gastronoms, supermarkets, and restaurants/cafes, which are all easily distinguishable.
However, it should be noted that these segmentation variables are not discrete and cannot be
used by themselves. In other words, there exists 3 distinct strategic groups that incorporate a
unique mix of certain characteristics of the 4 segmentation variables, and these strategic groups
should be considered as market segments instead. The strategic groups can be divided into:
leaders, regional, and boutique. The leaders are Ice Fili and Nestle, both competing for the
leading position primarily through brand strength. Regional producers focus on local tailored
7
8. needs through low price, while boutique producers such as Baskin Robbins and Haagen-Dazs
differentiate based on high price and high-end products. The mix of the 4 segmentations
variables that each of the 3 groups employ can be seen from the segmentation table (Exhibit 2)
and graphs (Exhibit 3a and 3b). Ice-Fili and Nestle mainly distribute their products nation
wide through all the distribution channels. They usually have mid level prices and serve both the
on-the-go and household consumption market. The regional producers concentrate on the kiosks
and mini-marts, concentrated mostly in regional areas for low price on-the-go consumption. The
boutique producers rely on their network of restaurants and cafes in cities to serve the dine-out
demand with high-end products. The key success factors would be the increased availability of
ice cream products using the entire distribution channel, while meeting the specific demands of
various buyers with differentiated products.
The most attractive segment in the ice cream market based on growth potential is the
household consumption and the boutique restaurant and cafรฉ segment. This is in fact supported
by the over saturation of on-the-go consumption at kiosks and mini-marts. The main reason for
this growth potential is due to the transition from closed to open economy in Russia. In the
closed economy, opportunities for extending into niche markets were limited and exposure to the
lifestyle in an open economy was limited. In general, developing countries tend to adopt the
lifestyle of a more developed open economy, and Russia is no exception. In terms of segment
attractiveness, the household consumption segment presents an advantage over other segments
because it is less sensitive to fluctuations in seasonal demands. On-the-go consumption that take
place outdoors might decrease significantly in the winter, but household consumption which
takes place indoors could be less affected by cold weather. In addition, household consumption
8
9. in general presents a higher sales figure per purchase due to the increased volume of ice cream.
The boutique segment is attractive in terms of higher margins and might present an opportunity
for Ice-Fili to capitalize on its long brand history and image of quality Russian ice cream.
However, although ice cream in Russia was traditionally considered as an impulse, โon-
the-goโ product, it had not been recognized as a product that could be stored at home and
consumed at any desirable time and occasion. The problem was that such kind of product usage
had not been developed in the consumersโ minds due to lack of marketing efforts. For the
boutique segment, Ice Fili had not positioned itself as a premium brand differentiated by
exquisite ingredients and high price, as with the case of Baskin Robbins and Haagen-Dazs.
9
10. Competitors
Ice-Fili produces ice cream, a part of the consumer desert and drinks industry. The ice
cream industry competed with several products like soda, beer, yogurts, chocolate, and other
candies for a share of the consumer spending. Ice cream had been a shrinking industry whereas
the companies in other industries were experiencing high growth. Some of it could be attributed
to more spending on marketing and advertising by the companies in other industries. The ice
cream industry had lagged its competitors in positioning their products to be used under different
situations.
Exhibit 4 shows the total ice cream production and Ice-filiโs ice cream production during
the past 6 years. Ice cream production in Russia has been growing at a very slow pace over the
last 6 years. Ice-fili production volume had decreased durting those 6 years and had resulted in
significant erosion of its market share. It faced intense competition from foreign companies like
Nestle, Baskin & Robbins, and Haagen-Dazs (a part of General Mills) as well as small regional
producers. Ice-filiโs market share had reduced from approximately 50% to 10.3% in 1997 to
5.2% in 2001. The competitorโs for Ice-fili can be divided into 2 categories:
1. Foreign companies like Nestle, Baskin & Robbins, and others.
2. Small regional producers.
Foreign companies had several advantages over Ice-fili such as equipment and packaging
technology used for ice cream production and strong financial support from itsโ parent
10
11. companies. Furthermore, the image of foreign ice cream products was of higher value, justifying
the higher cost paid by the consumers. The foreign producers used chemical preservatives which
led to lower costs due to increased shelf life of the products and lower wastage. One of the most
significant advantages of a producer like Nestle was their strong distribution channel. Apart from
ice cream, Nestle produced a wide variety of other products like coffee, confectionary, chocolate,
pet food, bottled water and cereal. Thus, it could market its ice cream products through a large
distribution network for all of its products. This led to a high penetration level of its product
among the consumers.
The other competition to Ice-fili emerged from small regional producers. These producers
had significant cost advantages due to new equipment and manufacturing facilities, lower labor
costs, and lower rent costs as they were located away from the metropolitan areas. Also, these
companies had lower transportation costs as they sold their products closer to the region where
they produced. In addition, the distributors preferred the regional producers due to their
flexibility to produce an in demand ice cream tailored to local needs.
11
12. Resources
Unlike its foreign rivals, Ice-Fili still used high quality natural ingredients instead of
artificial and preservatives to keep the tradition of the Russian ice cream. By doing so, Ice-Fili
produced ice cream with a taste more fit for Russian consumers. However, these raw materials
led to high costs because it was difficult to store and transport products that used such materials.
In addition, the taste of consumers in other countries was unknown. Although most product lines
already utilized imported equipment in Ice-Fili, 25% of overall volume was produced by old-
generation equipments, which cost 8 million dollars to modify. In its financial statement
from1996 to 2001, Ice-Fili did not have any long-term debt. Even though it was positive in that
Ice-Fili would not suffer financial distress caused by long-term debt, the downside was the lack
of an effective way to raise funds especially in the developing period where equity investors
were highly skeptical of investments. In addition, there was an obvious weakness for Ice-Fili in
the ice cream market, that is, the absence of a specific trademark for its own brand. โLakomkaโ,
accounting for 30% of sales volume, was produced by at least five companies at the same time.
There was one brand named โLeningradskoeโ, also used by many domestic companies.
Moreover, the lack of effective distribution networking was also one obstacle that hampered its
rapid growth in the whole market. On the other side, there had been an strengthening of human
resources resulting from a restructured organization and culture. Employees were more satisfied
because the company was run more like a family in which employees were cooperative with
each other. The restructured organization led to employees with greater responsibilities and
reinforced rewards and punishments further than they were in the Soviet time. In order to
12
13. develop an intensive competition environment, Ice Fili also paid much more attention to recruit
many young managers with strong abilities to work in an open market economy.
13
14. Alternatives and Recommendations
Over the course of the analysis, a number of alternatives were identified for success of
Ice-filiโs future. Some of the alternatives included exports to other USSR countries, alliance with
other fast food restaurants, creation of trademarks and patents for its products and vertical
integration with a distributor. However due lack of information, these alternatives were not
analyzed in detail.
Based on the key operating financial ratios of Ice-Fili in Exhibit 7, it can be seen that
operating profitability based on Return on Net Operating Assets (RNOA) and the profit margin
has been decreasing over the past several years. In order to improve its performance, Ice-fili
should focus on three key areas in its core competency of ice cream production for Russian
industry.
1. Consolidation of products and creation of power brands (highly successful products).
2. Strengthen distribution channel.
3. Increased marketing and advertising of its brands.
Ice-fili has one of the highest ratios of ice cream products to production capacity in the
Russia. Also around 70% of Ice-filiโs products are sold through kiosks. Since these kiosks are
small booth like structures, they have very little storage capacity and thus store only few
products. Thus consolidation of products will not impact its sales revenues in a significant way.
Also it will create a simplified production and packaging process for its products. This will lead
14
15. to a reduction in the higher percentage of line expenses and thus cost savings for the company.
Apart from a higher income margin, the company can focus its human and financial resources in
its power brands and penetrate into the market.
To tap the broader market Ice-fili needs to strengthen its distribution channel across the
country. It distributes only 15% of its through Service-fili and its distributors compared to 41%
of competitors. This channel primarily distributes its products to mini markets, gastronoms and
restaurants, where Ice-fili needs to increase its exposure. Thus improving the relationships with
this channel can increase its market share at these points of sale.
The last important factor is to create an effective marketing strategy to advertise its
products. The advertisements should create brand awareness of Ice-filiโs products; portray its
advantage over the foreign players in terms of its quality. Also the advertisements should help
create a larger and growing market for the ice cream industry as a whole.
Exhibit 5 shows the Effective Value Added (EVA) to the company over the last 5 years.
The graph shows the decreasing trend in the last 5 years. One of the reasons is due to the
increased equity and thus the high cost of capital. Thus we recommend the company to raise
capital from debt in foreign markets. Raising market in developed financial markets like USA or
Europe would give the company benefits like low interest rates, easier method to raise capital.
The company could enter into derivative contracts to hedge its currency risk.
15
16. Exhibit 6 shows that Accounts Receivables were approximately 20% of its total assets in
2001. Also the ratio had significantly increased from 1996. This is a result of bad debts or poor
collection systems of the company. Thus the company needs to build up its internal controls over
the financial systems.
The combined effect of the three key factors of Ice-Filiโs strategy could result in a
success for Ice-Fili due to the improvement of its core competency. Ice-Filiโs weaknesses were
in its inability to increase product availability and to market the products with additional capital.
However, by strengthening its relationships with suppliers, building a better marketing
campaign, and raising more capital to finance these initiatives, Ice-Fili could be well on its way
to higher profitability in the future.
16
17. Exhibit 1
Porterโs Five Force analysis for Ice-Fili
Bargaining Power of Suppliers
๏ฌ Low concentration of suppliers of
ingredients and higher concentration of
suppliers of equipment relative to producers
๏ฌ Low switching costs among ingredients
but high among equipment
Threat of entry Industry Competitors Substitutes
๏ฌ Easy access to ๏ฌ Large number of ๏ฌ Existence of
manufacturing equipment producers including foreign substitutes such as
๏ฌ Low skilled and regional confectionaries and snacks
employees ๏ฌ Increasing trend of
๏ฌ Low sophistication shift towards and growth
of manufacturing techniques of other consumer goods
๏ฌ Low brand loyalty ๏ฌ Low switching
๏ฌ Easily extended costs
from other frozen foods
industry
๏ฌ Low governmental
and legal barriers
๏ฌ Easy access to
distribution channels
Bargaining Power of Buyers
๏ฌ Low product differentiation
๏ฌ Low switching costs
๏ฌ Low demand elasticity
17
18. Exhibit 2
Segmentation of the Ice Cream Market
Distribution Channel Kiosk Minimart Gastronom Restaurant Supermarket
Shares 49% 29% 17% 3% 2%
Purchase Behavior Impulse Impulse Household Luxury/Impulse Household
Geographic Area National City/Regional City/Regional City City
Product Characteristics On-the-go On-the-go Storable Immediate Consumption Storable
Low Price, Low Price,
Taste, Quality,
Extensive Extensive Taste, Quality, Exquisite Flavor, High
Key Success Factors Variety, Shelf
Distribution Distribution Variety Quality, High Variety
Space
Network Network
Nestleโ, Regional Nestleโ, Regional Nestleโ, Regional Baskin Robins, Haagen-
Competitors Nestleโ
Producers Producers Producers Dazs
18
19. Exhibit 3a
Price and Location attributes
Exhibit 3b
Distribution Channel and Purchase Behavior Attributes
19
20. Exhibit 4
Production in '000 tons Production of Ice cream
400
350 Ice-fili's
300 production
250 volume
200
150 Production
100 Volume in
50 Russia
0
96
97
98
99
00
01
19
19
19
19
20
20
Year
Exhibit 5
Economic Value Added (in rubbles)
30000
25000 Cost of Capital
20000
15000 10%
10000 15%
EVA
5000 20%
0
-5000 1996 1997 1998 1999 2000 2001
-10000
-15000
Year
20