S. A. Chupa Chups is a Multi-National Company that has grown internationally since its inception in 1958. Reasons for successes of this company have been their aggressive approach in developed and developing nations as well as the partnership they do with existing firms in those nations. The problems I noticed with their development were their efforts to diversify from core competencies and their organization structure that was central-based and did not highly promote worldwide learning from experiences.
Problem I:
The first problem I'm noticing in this case is the effort being put forward to diversify from their core competence, making confectionery products. I do understand that it may be economically sound to diversify into markets that are complimentary to your core where economies of scale could be realized. But in this case it seemed like Chupa Chups was trying to build a kingdom where everything they needed would be supplied by an internal source.
The scenario where Chupa Chups partnered with the bread baker to make cakes was a great use of their core competence being leveraged for other revenues. In this case, there were common resources required for both the candies and the cakes that Chupa Chups didn't have to recreate because of their presence in the industry.
There were other instances where Chupa Chups developed its own distribution system for the products. I feel that there were opportunity costs involved with doing this that could have been defrayed by outsourcing the distribution and investing that capital into making candy.
Proposed Solution(s):
There are two options being recommended that will provide a solution to this problem. The first one assumes that Chupa Chups has a competitive adv...
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...exists within the organization. Also, the meetings that will occur with the virtual teams should probably be no more frequent than once a month.
Impact to Bottom Line:
There will be a cost associated with either solution that will impact the bottom line in the short term. Nevertheless, I feel that there will be intangible benefits realized from this sharing of information that will indirectly have a positive impact on the bottom line.
Recommendation:
I recommend that Chupa Chups diversify and gain economies of scale as suggested in solution two for the first problem. Since they have a huge distribution system, they would have already learned lots about distribution systems that can be incorporated on other customers.
As for the knowledge sharing, I feel that it's important to implement both solutions to gain the full effect of economies of scope.
First, the comeback of this company was worthwhile because of it’s company worth. As mentioned in the article, “410 million dollars was the price that ‘Apollo Global Management’ and ‘C. Dean Metropoulos and company’ paid for the Hostess Cake division.” This shows that investors want to invest in the company because these two hot shot companies are showing confidence in Hostess. Also, the Twinkies were off the market for eight months after, …“having failed to reach a deal on a new contract with its striking bakers.” These eight months were spent in idle mode for this large company when it could be producing more companies. With these eight months not producing investors started to lose interest even though the public is still roaring over this. In addition, having failed to make a deal with bakers this shows that Twinkies are not appealing to bakers to produce, even though it is apparently “Americas favorite snack.” These facts are a negative weight to the company worth if Appollo and Metropoulos hadn't stepped in and had interest in the ‘indestructible snack’, overall been underdogs in saving the Twinkie and launching it into a successful comeback.
It is with reason to think this company needs to expand or do something to keep its current competitive advantage. Otherwise in this growing market the company will fall to far behind the larger restaurant chains that are gaining substantial interests in this new market.
PepsiCo can potentially acquire California Pizza Kitchen and integrate it in the company’s decentralized management approach. Since PepsiCo executives have experience in the quick service food industry, it should not be a reach for the company to successfully run this casual dining restaurant. For this venture to be successful, it is imperative that management cut down the operating costs at California Pizza Kitchen through the PepsiCo Food Systems distribution network and improve on the 3.1% operating margin that California Pizza Kitchen is currently operating at.
Option 2 has long term sustainability. It involves a one term expense, and provides revenues for the foreseeable future.
Krispy Kreme Case Study Question 1. The chief element of Krispy Kreme's strategy is to deliver a better doughnut and to appeal to customers in new ways. They have taken great steps to insure customer satisfaction from the use of their proprietary flour recipe to their automated doughnut making machines. They have chosen to target mainly markets with 100,000 households. They also were exploring smaller-sized stores for secondary markets.
Rheude, J. (2016). The Future of Distribution - How Products Will Get to Markets. Retrieved from https://www.webretailer.com/lean-commerce/future-distribution/
Frito-Lay is one of the top producers in the snacking industry and the name rings all too familiar among consumers. What consumers are not familiar with is the competition among Frito-Lay and their numerous competitors such as “ConAgra (DAVID Seeds, Crunch n’ Munch, Orville Redenbacher), Kraft Foods (Nabisco, Honey Maid) and Procter & Gamble (Pringles)” (Sloan, Marshall & Stuart, 2012 p. 443). The lovable corn chip snacks got their beginning in 1932 when C.E. Doolin began selling them in San Antonio, Texas. Coincidentally in the same year Herman W. Lay founded his business with Lay’s potato chips in Nashville, Tennessee. Subsequently in 1961 the two chip retailers merged to become Frito-Lay, Inc. However, by 1965 Frito-Lay, Inc merged with
BR was sold to Delta Foods in 1996 for US $2 billion. At this time, it was one of the largest fast-food chains in the world generating sales of US $6.8 billion. DF purchase of BR brought in a new cultural paradigm. DF is an individualistic, aggressive growth company with brands they believe are strong enough to support entry into new overseas markets without the need for local partnership. The DF strategy is one of direct acquisition and JV’s were not part of their strong suit. DF strategic implementation is based on hiring local managers directly or transferring seasoned managers from their soft drink and snack food divisions. The DF disdain for JVs is clearly reflected by their participation in only those JVs where local partnering was mandatory (e.g. China) to overcome regulatory barriers to entry. JVs had been the predominant strategy for BR which was unlike the DF outlook. Terralumen’s strategy was misaligned and out of sync with the DF strategy. This was unlike the complementarity that existed with BR’s strategy. This misalignment began to affect the JV relationship that had worked well with BR in the initial years. The failure of Terralumen and DF to recognize this fundamental cultural difference between their operational strategy styles i.e. Individualistic and Collectivism leads to their inability to proactively create steps for better alignment in the early period after acquisition, creating uncertainties and difficulties for both corporations. There is a lack of communication and virtually absence of trust between two new partners. DF appeared to be flexing its muscles in the relationship and using a more masculine approach compared to Terralumen’s more feminine approach. Both the corporations are strategically involved in a complex situation where they appear reluctant to address the issues at stake and move ahead together. The DF strategy of
Just as in the emerging markets anywhere in the world, distribution networks in India too tend to be unique and disjointed, and this has been highlighted by C.K. Prahlad in his book, ‘The Fortune at the Bottom of the Pyramid’. He says that distribution systems that reach the BoP are critical for developing this market and that innovations in distribution are as critical as products and process
Virtual teams are administrated essentially the by same fundamental values as traditional teams. Yet, there is one systematic difference. This difference is the way the team members communicate. As a substitute of using the full range and dynamics of in-office face-to-face exchange, they now rely on a repertoire of special communication networks facilitated by modern technologies, such as e-mails, faxes, phone calls, teleconferences, and virtual meetings as a result of the team being geographically dispersed. Moreover, this new type of team uses asynchronous technology to communicate amongst the team because of the teams perchance being in different time zones. The purpose of this paper is to show the positive and negative qualities of virtual
Charles Chocolate’s sales revenue decreased -1.176% between the years 2010 and 2011. The equation that as used to get that was Revenue Growth= 100 × (Current Value-Prior Value/Prior Value) 100 × (11,850,480-11,991,558/11,991,558). The change in the sales revenue could have happened for very many reasons. Being a premium chocolate making company, their product may not have been very high in demand. Also forecasting the demand for their product was not a very easy thing to do either. Another issue that Charles Chocolate’s faced their competitors, such as Godiva and Lindt, are more of a well known brand then they are.
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