Kudler Fine Foods Case Study

Kudler Fine Foods Case Study

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Kudler Fine Foods Case Study



Strategy
Kudler Fine Foods is a local gourmet food store company in the San Diego metropolitan area. The company is founded a few years ago by President Kathy Kudler and has three stores located in La Jolla, Del Mar and Encinitas. Kathy Kudler's vision is "to create one store that would stock a wide selection of the freshest ingredients as well as all of the tools a gourmet cook could ever want" (Kudler, n.d.).
Kudler would like to expand the services, to improve the efficiency of the operations and increase customer's purchase cycle in the next year. In order to obtain these objectives Kudler will have insight in how the changes in technology have created business opportunities and are interested in the identifying of the generic strategy and tactics. The management would also like to know how they can continuously scan the fine foods grocer industry for ideas and updating the company strategy. The answers of these questions are described in this paper.
Changes in technology
The key question in this section is how the changes in technology have created business opportunities for Kudler. There are many changes of technology. This is a broad spectrum. There are changes from the suppliers, the internal organization and from the customer's perspective. Examples are the information technology like the internet, Enterprise Resource software Systems, innovation in production and information technology. Research learns that "today's information systems ... generate new challenges in organizing, analyzing and protecting information" (Gomez-Mejia & Balkin, 2002, p. 386). Information is important for Kudler because this is useful for the decision making and supply chain process. Table 1 gives an overview of some general changes by technology. Table 2 gives an overview of business opportunities from best practice. From technical perspective Kudler have the possibility to start with online business in the business-to-consumer and business-to-business market. An opportunity is to start with an online shop for consumers and companies, with cooking recipes and online instruction video's and the marketing activities. Partnership and alliances can create additional products and services for the stores and the online business. Strategic co-marketing with another food store is also a change. A merchant partner programme is also an interesting opportunity to grow. Excellent hard and software can streamline the processes in the company and contribute to costs reduction.
Generic strategy and tactics
For a good understanding of the strategy it is important to know the mission of the company.

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The mission is, briefly said, what the company would like to reach or a high level set of goals of the organization. It is future related. The strategy is how to reach the mission. "Kudler Fine Food's mission is to provide our customers the finest in selected foodstuff's, wines, and related needs in an unparalleled consumer environment" (Kudler, n.d.). Important aspects for identifying Kudler's strategy are the internal developments and market developments.
Internal developments
According to the company's intranet site Kudler had made a significant growth in the last years. The company "is now focused on expanding the services, improving the efficiency of its operations and increasing the consumer purchase cycle as a means to increasing the loyalty and profitability of its consumers. Profitability will also be increased by cost reductions ..." (Kudler, n.d.). An important part of company's strategy is to focus on increasing the purchasing of products with high margins by current and new customers. According to Kudler's sales plan for 2007 the company focused on new customers with a high income. Special cooking classes must increase the purchasing rate. This means focus on a specific market segment.
Market developments
Kudler sells fine food. A part of this is organic food. The market developments are positive because "... the United States organic food market grew by 12.3% in 2006. In 2011, the market is forecast ... to have an increase of 65.6% since 2006" (Datamonitor, 2006, p. 3). This is "now one of the most important global food trends" (Jones, 2006, p. 35) and "can be seen in the context of the wider trends of health, convenience, indulgence and innovation" (Jones, 2006, p. 35).
Generic strategies
There are three generic strategies: cost leadership, differentiation strategy and focus strategy. Table 3 gives an overview of a few scanning possibilities for Kudler. The generic strategies are more closely clarifies in table 4. Table 5 gives an overview of the generic strategies and the industry forces. Kudler is active in a market segment of fine and organic food with special products and services. The generic strategy in this case is a focus strategy. Kudler calls the focus strategy also in his sales plan. This is correct.
Identifying some tactics
"A tactic is a method employed to help achieve a certain goal" (Wikipedia, n.d.). An example of a tactic is to organize a frequent shopper program. Another example is the organization of parties in the store. These parties must show how customers could prepare the fine and organic food. These activities help to increase the turnover. The implementation of a benchmark with Nordstrom must help to reduce the costs.
Scanning of the fine foods industry
The business environment is continuously changing. New competitors, products, services and suppliers entries the markets and others leave the market. The taste of customers is changing and trends influence the demand. It is important to anticipate on time on all these developments. "Firms study the external environment in order to identify opportunities" (Gomes-Mejia & Balkin, 2002, p. 159). There are two important aspects for answering Kudler's question concerning continuously scanning. The first is (1) the scope and the second (2) how Kudler can scan the environment.
Scope
"Firms can examine the environments at four different levels of specificity: the general environment, the industry, strategic groups and direct competitors" (Gomzez-Mejia & Balkin, 2002, p. 161). Examples of general forces from the environment are macroeconomics, government, technology, resources, laws and legislation, ecology, and the labor market. The industry can be described as a group of companies in a market segment with similar or comparable products(group(s)). "If a company participates in multiple business activities, it is usually considered to be in the industry in which most of its revenues are derived" (investorwords, n.d.). Comparison can also be useful for one or more product groups in case of a diver's product portfolio. Important to know from the industry level are the new entrants, treat of substitutes, suppliers and customers. New entrants can increase the competition. "Higher quality, lower costs, more features, and safety considerations ..." (Gomez-Mejia & Balkin, 2002, p. 162) are examples of treats of substitutes. Kudler's purchase activities play an important role for the company. Excellent purchasing can influences the quantity and quality of the product portfolio, the services but also the costs for the company. This is important for the business because most " ... customers prefer higher quality and better service at lower costs" (Gomez-Mejia & Balkin, 2002, p. 162).
Another method for analyzing the environment is to make a PEST analysis. "PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit" (Businessballs, n.d.).
How to scan the environment
Gomez-Mejia and Balkin (2002) calls four general components, which are useful concerning continuously scanning. These components are scanning, monitoring, forecasting and assessing. "Scanning and monitoring are concerned with interpreting current or past environmental information that the firm believes is consequential to strategic decisions ..." (Gomez-Mejia & Balkin, 2002, p. 160). Forecasting is trying to get a clear picture about the future. This is not risk-free because it is difficult to predict the future. After collecting the information from different levels from the environment, it is important to evaluate and analyze these data and translate this in opportunities and threats for the company. Table 5 gives an overview of the scanning possibilities of Kudler Fine Food.
Conclusions


References
Businessballs (n.d.). PEST Market Analysis Tool. Retrieved on
February, 8, 2007 from http://www.businessballs.com/pestanalysisfreetemplate.htm
Business insights (2000). Best Practice - Online Business
Strategies. Business Insights Ltd. Retrieved on
Datamonitor (2006). Organic foods in the United States. Industry
profile. Retrieved on February, 7, 2007 from http://www.datamonitor.com
Investorswords (n.d.). Industry definition. Retrieved on
February, 8, 2007 from http://www.investorwords.com/2447/industry.html
Turban, Efriam & Rainer, Kelly & Potter, Richard E (2003). Introduction to Information Technology. John Wiley & Sons, Inc.
Wikipedia (n.d.). Retrieved on February, 9, 2007 from http://en.wikipedia.org/wiki/Tactic

Table 1

Overview of some general changes by technology

Perspective Examples of changes by technology
Suppliers
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