5 Forces Dynamic Analysis Essay

doubt 1. (refer to append glasss on p.5)Political1) From 1991-1998 No long-lived anti-alcohol campaign to boost glass- unguent industry. crackpot cream industry had to fatten up with succour intersection points. 2) Since 1998 Financial Crisis, Russian rubles devalued by two-thirds. Russians cannot afford foreign products and companies relied more than on national suppliers. 3) 1999 VAT raise. Fruit- ground rubbish-creams and popsicles raised to 20% VAT. Consumer purchase little ice-cream because of elastic demand, revenue is slight.Economical1) Privatized companies must overcome bad infrastructure, to bring about value in Primary and Support activities, and to extend the maximum grocery store share. 2) In ice-cream industry, Ice-Filis competitor, Nestl, built Nestls own infrastructure during the 1990s and Russian faced an enormous challenge.Society/ Culture1) Lakomka. Older customers chicane Lakomka, 5 competitors compete Lakomka. However, in a long term, Lakomka n eeds to halt its life if old generation dies. 2) Russian likes Condensed Milk (less sweet) ice-cream generally. But Nestl may change consumers behavior. 3) Consumers took ice-cream during short summer but took beer throughout year.Technological1) pertly imported equipment. Ice-cream industries invested hotly imported equipment to enhance infrastructure. 2) 90% of new equipment utilize for freezing and packaging in Russian trade, but only $1.5 to $2m per complete employment parentage. Not really improving.Substitutes (High Threat)Soft drinks, beers, chocolate, confectionaries were rising but ice-cream declined by 3.5% in 2002. Rivalry (High Threat)Nestl established great infrastructure and wanted to be only brand in Russia in 2-3 years time Entrants (High Threat)regional pissrs took 30% of domestic food commercialise and still growing. Supplier (High Threat)Imported ingredients were more expensive National suppliers had more supplier power, terms of ingredient were more expensive Buyer (High Threat)1) Customers had 240 different ice-cream products Yet to count substitute goods. 2) retailer cost 17.2% & distributors cost 30%, 47% of industries expenses From the PESTLE and ostiarius pentad Forces shown above, Russian ice cream industry was struggling to evolve.Question 2Resources (refer to appendices on p.6)1) Tangible resourcesIn Physical point of view, Russian ice-cream market contains different seed downs and fruits. This is also mention under point rare below in the same answer. Ice cream companies experiences long years industries, kind-hearted resources of local and national knowledge such as culture, marketing, and human connections were under the competitive advantage.2) Intangible resourcesFor sozzleds in Russian market, long ice cream brands were already enjoying reputation because about reputable brands were household place such as Lakomka.Under Capabilities1) ValuableDespite that is devaluation in Russian Rubles, which is a great opportunity to enter ice cream market in Russia in lower cost.2) RareTailor made Ingredients. Russia has a huge area, which may grow some specific type of plant that cannot find in other countries. Those local plant and fruit could contort into local ingredients to make a unique ice-cream that could be found in Russia only.3) InimitableIn the Russian market, there were more than 240 ice cream products al matchless. For a market entrant, the barrier of entry is low because customers were not cohesive to a particular ice cream brand and reject the others. Entrants neednt imitate other brand and enter to the market. That was why regional ice cream market enjoyed growth.4) Organized to be exploited by the firmRussian market used to have a weak organisational infrastructure, neither in vertical and horizontal integration during 2002. Nestl had formed a well infrastructure already but Nestl couldnt take immaculate integration in Russiamarket, there are still some populate for companie s can take on this opportunity to integrate horizontally and/or vertically at the moment, to grow on companys economies of scurf at this moment, rather than years later that all the market immense boys fill up the ice cream industry, which increase barrier of entries.Question 3 strategical Positioning Model (refer to appendices on p.7) In appendices 1, Ice-Fili contend board in Competitive scope but played eminence in Economic Logic. Despite Ice-Fili sold 6 Rubles and compete direct with some of Nestls mass medium price products, for a medium coat company with limited tangible resources, Ice-FIli unable to be a price Leader to compete with high economies of scale like Nestl and local grown companies. Ice-Fili had to prove its value.Porter 5 Forces (refer to appendices on p.7)Threat of Substitutes cloak east Europe and Germany Ice-Fili directors believed to take a interchange cow opportunity to produce modify ice and sell aboard. It was right as director witting subst itute goods and lower switching cost of Buyers can threat ice-cream business. If change ice aboard were Stars Market, of course it was value to invest in if dry ice was a Question label market, risk was much higher. Furthermore, Ice-cream market and dry ice-market may not share the same technologies merely based on same freezing system, Ice-Fili needed to put more confinement to control its business, plus taking care the tough ice-cream competition at the same time.Threat of entryIce-Fili alterd some sufficiency that raised the bar barriers of entry from below 1) It was right to restructure 117 salary levels to one under Corporate Organization & Structure, more cost flexibility & got disengage of high fixed cost rigid system. 2) Production set uped $8m on progress machinery with 90% used for freezing and packaging To tackle significant 5.7% packaging cost was reasonable. It may spend too much on improve lower cost Freezing system but spent less than 10 % on production, let Older generation equipment produced 25% production capacity was obviouslyinsufficient. Ice-Fili did not tackle high repair & nutrition cost.Buyers conditionIce-Fili planned their Product range with 170 different ice cream plus 20 new products every year. That let emptor to have more choice was creating far less sufficiency on cost control. Under poor financial position in 2002, simply should focus traditional intangible brand Lakomka and other most bankable ice-creamSupplier Power1) Ice-Fili kept 3-4 suppliers only. Kabuzenka stated Ice-Fili constantly received new one offers, but didnt diversify more suppliers. High Suppliers Power remained. 2) Ice-FIli never hedged foreign currencies that can cost less to buy foreign products.Question 4. (refer to appendices on p.8)Arenas- Red nautical (substitute products), Blue Ocean (Dry-Ice Market & theme park) Invest Foreign Dry Ice Market- Ice-Fili must ensure they were investing Star Market rather than Question Marks market. If not a S tar Market, Ice-Fili should not invest. Invest Ice plectrum theme park- Ice-Fili located nearby Moscow. It is inexpensive to set, and easy to attract some visitors to visit theme park. i) Introduce companys history ii) dwell brief production process, iii) let visitors taste and evaluate developing future tense product. iv) Visit cute graveyard of Ice-Filis buried products to create fun. Invest substitute products- E.g. beer, chocolate, soda, etc., as markets were expanding, in short term, to buy these companies shares and generate cash a.s.a.p. In longer term, get enough resources to develop its own brand, or fully takeover an existing substitute company.Vehicles- AcquisitionBackward integration- To yet storage cost of ingredients, could pay suppliers slightly more by delivering on time for production. This enhanced inbound logistics under Generic Value Chain, Porter 5 Forces Supplier Power, and decrease Operation cost. Forward Integration- Set up own small distribution warehous es across geographical market locations, ask few employees in each location. It runs several tasksa) Enhance OutboundLogistics by distribute products on time to all retail channels, replace 47% Retailers and Distribution costs.b) Use cheap operated SMS to communicate freely with local marketers, to tuck initiatory hand market demand and relevant information, to build up Services by developing relationships. Then e-mail this fount line information to headquarters on regular basis. Differentiation- Position medium price product and try to Re-register Lakomka 1) Register Lakomka- to become Ice-Filis unique product in the market. 2) Not stick to with leading Russian producers for joint advertising- The bond favor more on Russian big players rather than medium Ice-Fili. Bonds decision may constraint the future put on of Ice-Fili. Eventually, Ice-Fili could be destroyed by the bond, not by Nestl. It is not worth to save 0.44% cost by joining the bond. Staging- Based on priority of fin ancial resources inflow and outflow of time sequence as follows Invest substitute products 1st as market growing-register Lakomka-forward integration-backward integration-Dry Ice Market abroad-Ice lam theme park Economic LogicGain cash from face lifting market (substitute goods) Save cash to run future business.Conclusion1st invest Horizon 2- certain growing substitute market whence enhance Horizon 1- register Lakomka and integration, finally invest Horizon 3-Dry Ice and theme park.APPENDICESBrief HistoryPEST (question 1)Components of Internal Analysis (question 2)Strategic Positioning Model (question 3)Lower CostDifferentiationBoard rate Competitive ScopeNestl -Cost LeadershipIce-Fili- Medium Price,NestlNarrow Competitive ScopeCost FocusDifferentiation- Niche