BUSINESS STRATEGY

INDIVIDUAL ASSIGNMENT

Contents
1. 2. 3. Context of business strategy .................................................................................................... 2 Perera & Sons (pvt) Ltd ........................................................................................................... 3 Business Positioning ................................................................................................................ 4 3.1 3.1 3.2 4 Corporate Appraisal ......................................................................................................... 4 Competitive Strategy ........................................................................................................ 6 Scenario Planning ............................................................................................................. 6

Evaluation of possible alternative strategies ........................................................................... 7 4.1 Strategic options available ............................................................................................... 7

Balanced score card and KPI ................................................................................................... 8

Table 1- strategic options ................................................................................................................ 7 Table 2- KPI.................................................................................................................................... 8 Table 3- strategic plan for 1 strategic sub point ............................................................................ 11

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1. Context of business strategy

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2. Perera & Sons (pvt) Ltd

In 1902 Perera and Sons bakery was established by its founder, K.A. Charles Perera. First they sold their bakery goods by going door to door in his village. Then with he get financially stable he started his first bakery and with the time that bakery has developed as the strongest most well deputed local bakery food chain in the Sri Lanka Vision: To provide an excellent tasty food experience that satisfies our customers with highest quality baked goods to develop our brand name that encourage trust and quality
Corporate Values: -

Perera and Sons operates in accordance with the highest standards in all relationships with our stakeholders. Perera and Sons promote a climate which encourages innovation and diligence among staff by motivating and rewarding them.

Business Objectives

To expand the Perera and Sons food chain and offer above-average returns to shareholders of the company.

To become the leading fast food supply chain within the food bakery food market segments.

Major Goals: - (in 2years)

Achieve sales of $30 million by 2014 Report annualized profits from 30% in 2014 Spread the supply chain in all up countries Employ 200 people including 40% for bakery, 20% for transportation and 40% sales qualified by 2014

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3. Business Positioning
3.1 Corporate Appraisal

Perera and Sons is one of the leading bakeries in the industry and they have very good reputation among the customers and high market share though they have strong brand name and higher market share. Perera and Sons having a advantage of product ingredients availability as the company has signed agreement with suppliers and because even though the prices of the ingredients goes up, the prices the company gets the ingredients never goes down. Company is following a JIT system which is working really well as this is a food manufacturing company.

Perera and Sons having a poor management in the production and transportation has certain drawback for example: when they cant produce as they have planned and when they deliver food not on time and to match with the demand of the customers, it might lead to dissatisfaction of customers and eventually its having a possibility of damaging the company brand name The second weakness identified is that because of the inflation and economic crisis the cost and the prices increase rapidly which is having a huge impact on customer buyer behavior. it might lead to fall down of customer demand. They will try out other substitutes (instant food available in supermarket- ready made food) One of the weakest points which can be seen in Perera sons is that they are more focused in old, popular products but innovative products. In food industry they used to have a good name when it comes to cake manufacturing but they arent diversifying the product line from years but stick into the same old recipes. So other bakeries have taken over the cake market. There are so many opportunities in the local market for food industry. Most important one is the technology is developing day by day which helps to do things in an effective manner. Ex: - food processor, blender, mixer, micro-wave Owen etc. Customers are more aware of the market, product quality and safety which are also an opportunity of the company. Other point is that in the Sri Lankas urbanization rate and the woman employment rate goes up annually (refer appendix). It shows that all most all the family get busy in works. So they are used to consume fast food in daily basis which is good for the business. Development in
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marketing is also a good trend which helps the business to increase sales by following new techniques. Development in inbound as well as out bound logistics is also very important to the company. In the bakery, Perera and Sons are having a their own outlets to sell their goods so to deliver the foods from the bakery to the outlet, the transportation media to use is very important because it has to be done within a specific time period so that the customers wont get disappoint in the service that the company is providing so using the closest way and food van is appropriate to transport the goods which is safe. And the inbound logistic is that the company should have the goods ready to deliver them on time which depends on the ingredient availability, efficiency is essential. Other point is that the rate of internet users and online transaction develops eventually which is also a good trend. Even though there are so many opportunities, there are treads which can be seen in fast food industry. Main tread is that the high competition among bakers. Fab is known to be the strongest competitor of Perera and Sons but the small bakers also gives us a competition by selling goods in much lower price. Development in technology also tread because to buy new technological equipments it costs a lot initially and to train the people to use and maintain them also takes time and money. Sometimes maintenance also costs a lot more than using labor.

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BUSINESS STRATEGY 3.1 Competitive Strategy

INDIVIDUAL ASSIGNMENT

Perera and Sons follows a cost leadership strategy. 3.2 Scenario Planning

For example: If Perera and Sons setup an objective to increase its profit by 30% within two year, then Bakery needs to design a strategy in order to achieve this objective given above. The planned strategy would be able to produce advanced technology based foods to the market. But a situation might arise where Perera and Sons could not achieve this plan; therefore Perera and Sons should be always ready with another back-up plan in order to achieve their set target at the right time.

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Evaluation of possible alternative strategies

4.1 Strategic options available In Perera and Sons, it has been analyses that there are few strategies that the company can adhere depending on the companys current performance and the financial stability by using 3 accepted modules. 1) Generic strategy analysis 2) BCG Matrix analysis 3) Ansoff1 Matrix Analysis By analyzing each analysis, company has found out there are 3 types of strategies we can follow.

Table 1- strategic options

Analysis Generic strategy analysis

Strategy Cost leadership

Actions Have a tough control system Enhancing productivity, Lean Thinking, Total Quality Management ( Just-in-Time (JIT), Supply Chain Management Low investments Researching and development ( according to customers demand and taste) New products( new cake quality and

BCG matrix strategy analysis Cash cow Ansoff Matrix analysis Product development

flavors, new fast foods in affordable prices) New marketing strategies

From the above strategies company selected product development after analyzing feasibility, suitability and acceptability.
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Balanced score card and KPI

Table 2- KPI

Departments Finance

Areas Return On Investment Cash Flow Return on Capital Employed Financial Results (Quarterly/Yearly)

KPI Return on Equity growth rate compared to industry growth rate, levels of operating cash flow Cycle times inventory turnovers defect rates plant utilization targets met unit cost compared to competition Overhead trends. Number of new products number of patents new technologies adopted system improvements implemented wage increments Price comparisons to competition number of on-time deliveries
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Internal Business Processes

Number of activities per function is the right process in the right department?

Process blockage Process mechanization

Innovation & Growth

New Products Technology Is there the correct level of expertise for the job? Employee turnover Job satisfaction Training/Learning opportunities

Customer

Delivery to customer Quality performance for customer Customer satisfaction rate

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INDIVIDUAL ASSIGNMENT response times customer complaints number of product returns, customer results awards survey service

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6. Identification of strategies and core competencies

6.1 Core competencies core competencies : - companies having a very strong skilful labor force

uniqueness: - the labor force go through a special training for 6 months after the recruitment the they get 2months more on the job training. They get evaluated in every stage and if they were unable to perform, they get dismissed. The ingredients they use and the methodologies are unique where only the top chefs are aware of it. Top chefs have gone through special training of 3months in abroad. Annually they keep workshops to make the employees aware of new technologies in the market. So its the companys core competency which makes it unique and hard to imitate.

Importance of core competency to the business? Its unique which others dont have. Company has been developed there skills in many ways and their standard also high which makes other competitors hard to compete with Perera and Sons company. 6.2 Future strategies Introducing new products to the market New cake flavors New food items

Develop the existing products available Both quantity and quality

Increase the work force specially in research and development department Invest 20% from the profit will be allocated for marketing

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Table 3- strategic plan for 1 strategic sub point

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Strategy

process

Jan-march

AprilJune

July- Sep

Oct- Dec

Issues arouse

Increasing the product line

Research on cake flavors Testing and auditing Marketing the product Evaluate and give a feed back to the management

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