Strategies: Kudler Fine Foods

Strategies: Kudler Fine Foods

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Kudler Fine Foods is a gourmet foods retailer founded in 1998 by Kathy Kudler in LaJolla, California. Kudler offers a wide variety of fine wines and gourmet cheeses, European-style baked goods, organic meats, seafood, produce, and exotic herbs and spices. Appealing to connoisseurs of gourmet foods has enabled Kudler to grow steadily, adding stores in Del Mar in 2000 and Encinitas in 2003 (Apollo Group, 2005). This report will examine Kudlers current management strategy as well as changes in technology and how this can create new opportunities for Kudler.
Technology
Current Practice
Kudler currently uses information technology to keep track of customer purchases. Accounting data is collected by the point-of-sale terminals (cash registers) that are used in each store at check-out to record all items, quantities, prices, taxes and totals for all daily sales transactions. (Apollo Group, Inc 2005). This allows Kudler to keep track of the number of items sold to help determine need while forecasting future ordering.
According to Kudler’s intranet site, Kudler keeps a database with several tables containing customer information. “The Customer Table contains demographic data for each of Kudler’s customers. The data in this table is used to access the name and address of customers for order processing and for special mailings for anniversaries and/or birth dates, etc.” (Apollo Group, Inc 2005).
Opportunities
Competitive intelligence is the process of monitoring the activities, performance, pricing strategies, advertisements, websites, and any information available regarding a company’s competitor (Turban, Rainer and Potter 2003 pg 610). Kathy Kudler does this by “monitoring what other gourmet foods stores are offering, what’s being advertised in gourmet magazines, what is being shown at gourmet conventions, and what shows up on gourmet Web sites” (Apollo Group, Inc 2005). By taking advantage of this information, Kudler can stay current with new products that are available in the gourmet food industry. This process can help Kudler raise the quality of their strategic planning.
Kudler has the opportunity to make changes and improvements in the way business is conducted that can increase operational efficiency using advances in information technology. For example, Kudler’s website has indicated that forecasting future inventory needs has not been very successful using their current method. Kudler’s current order system, involves using several paper documents that are standardized and purchased “off the shelf.” This purchase order form is completed by the store manager and is mailed, handed, faxed, emailed to suppliers, This document then serves as the key source for tracking and purchasing.

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Kudler can develop a computerized process to streamline ordering. “A process is any part of an organization that takes inputs and transforms them into outputs that it is hoped, are of greater value to the organization than the original inputs “(Chase, Jacobs,and Aquilano 2006 pg 154). . By using the new information technology available, Kudler can avoid possible delays in service and possibly increase customer satisfaction by streamlining its processes. This process is known as business process reengineering.
Business process reengineering, (BPR), is a holistic process that can lead to complete organizational transformation and stabilization (Turban, Rainer and Potter 2003 pg 629). By implementing BPR, Kudler will introduce new information technology to automate several processes and eliminate the delays caused by manual processes. The introduction of new information technology can also reduce business cycle time with the anticipated results of improving customer satisfaction.
Business Strategy
Diversification Strategy
Kudler’s business strategy involves the sale, preparation, and consumption of fine gourmet foods. Strategic sales objectives revolve around becoming the best in the industry. This diversification strategy is know as a concentration strategy and focuses on a simple business operating in a single industry segment (Gomez-Mejia and Balkin 2002 pg 173). Kudler’ s strategic sales objectives include the following:
• New Customer Focused Programs
• Better Information Management
• Targeted Awareness Building
• Increased Behind the Scenes Efficiency (Apollo Group, Inc 2005).
These objectives all revolve around increasing customer satisfaction, improving sales, and cutting costs. The result will be an increase in sales of the company’s products; gourmet food. The following statement is taken directly from Kudler’s intranet site:
The objective of the sales organization is to successfully implement programs designed to increase revenue and decrease costs. The sales group will support the rollout of new customer focused Programs, leverage customer information to support sales growth of existing customers, initiate targeted activities to recruit high-profit new customers, and support operational cost-cutting efforts taking place company-wide. (Apollo Group, Inc 2005).
This statement indicates that Kudler plans to focus on improving sales of gourmet foods. Kudler plans to organize gourmet cooking classes, and initiate frequent shopper programs to reward loyal customers. Other initiatives include increasing marketing in key areas and increased cost containment initiatives. These sales plans all support the main goals of selling more gourmet foods.
Business-Level Strategy
The type of products that Kudler sells are targeted towards higher income brackets. Kudler does not traditionally offer everyday discounts. Kudler’s practice of offering products and services that customers perceive as unique and different verses offering price reductions indicates that they use a differentiation strategy. According to (Gomez-Mejia and Balkin (2002) pg 174), “A differentiation strategy requires a firm to continuously invest in the creation of new products or add new features to existing products so that customers believe the products differ from those of competitors along as many dimensions as possible.” Kudler’s offerings include organic foods, catered parties, both in the store and in individuals homes featuring celebrity cooks and food experts, and loyalty points that can be redeemed for high end gifts.
Strategy Implementation
Kudler has implemented some initiatives to maintain customers. “A firm that is clear about where it wants to go (effective strategy formulation), how to get there (effective strategy implementation), and what works (feedback from implementation used in strategy formulation) is more likely to achieve strategic competitiveness and sustained superior performance.” (Gomez-Mejia and Balkin (2002) pg 175). Kudler has an opportunity to become the leader in the local gourmet food industry. Cooperative strategies involve establishing partnerships or strategic alliances with other firms (Gomez-Mejia and Balkin (2002) pg 176). Kudler has begun this process by contracting with local growers of organic foods. This alliance will allow Kudler to offer a product that is not readily available, and will give the farmers a new place to sell their goods.
Strategic Leadership
Kudler can expect to increase sales by maintaining effective leadership. Effective leadership is instrumental in maintain a successful organization. This is especially true for top executives who are responsible for overseeing general implementation plans, making key resource allocation decisions, and delegating day-to-day operations (Gomez-Mejia and Balkin (2002) pg 176). Leaders are influential in their attitudes and behavior and can encourage and inspire staff members to be productive and feel valued. This alone will can encourage staff members to want to make the team and thus the organization as successful as possible.
Strategy Revision
In addition to having a dynamic strategy, Kudler needs to have a plan in place to make revisions to the strategy. There must be an evaluation and monitoring process in place to ensure the continued success of the organization. Every organization needs to evaluate the strategic processes in place to make sure the outcomes are meeting expectations and maintaining a competitive advantage. If this is not happening, then the process may need to be modified. Kudler can maintain the competitive advantage by analyzing the internal and external environments.
Scanning the external environment includes competitive benchmarking to see what other retailers are doing, much like Kathy Kudler currently does. Monitor changes that affect taste or changes in culture and mindset. These include such events as elections, currency stability economic stability, lower inflation, savings rates and popular culture. Forecasting attempts to predict what is likely to happen in the future the intensity of the anticipated event, its importance to the company, and the pace or time frame in which it may occur (Gomez-Mejia and Balkin (2002) pg 177). Finally, assessing the data derived from the above evaluation techniques can help a company arrive at an appropriate strategy.
Kudler must also monitor the internal environment. “Encouraging managers and staff to develop and offer new ideas will encourage growth and innovation. Innovation contributes to a sustainable competitive advantage if (1) it is difficult or costly for competitors to imitate, (2) customers can see a value in the innovation, (3) the firm enjoys a time advantage over the other company, and (4) the firm is capable of commercializing the innovation” (Gomez-Mejia and Balkin (2002) pg 177).
By embracing information technology, being open to new ideas, encouraging innovation and analyzing the internal and external environments, Kudler can maintain the competitive edge it currently holds and remain successful. Kudler is well established in a specialty retail market, having developed many required processes and personnel to support them. Taking advantage of future growth opportunities presents Kudler with challenges. The organization will be well served by taking the necessary steps in developing and maintain strategic initiatives and analyzing the collected date to make the appropriate changes needed to keep the organization in line with its goals.

References

Apollo Group, Inc (2005). Kudler Fine Foods. Department/Section. Retrieved July 16, 2007. MBA/502 – Managing the Business Enterprise. https://ecampus.phoenix.edu/secure/aapd/CIST/VOP/Business/Kudler/KudlerHome002.htm
Chase, R., Jacobs, F., Aquilano, N., (2006). Operations Management for Competitive Advantage, 11th Edition New York, New York: The McGraw-Hill Companies
Gomez-Mejia, Luis R. & Balkin, David B. (2002). Management. New York, New York: The McGraw-Hill Companies.
Turban, E., Rainer, R.K., & Potter, R.E., (2003). Introduction to Information Technology New York, New York: John Wiley & Sons, Inc
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