STR 581 Week 4 Learning Team Assignment - Strategy Paper - BONUS 2
STR 581 Week 4 Learning Team Assignment - Strategy Paper - BONUS 2
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Date Created: 11/14/15
1 Running head: KUDLER FINE FOODS STRATEGIC PLAN Kudler Fine Foods Strategic Plan YOUR NAME(S) STR/581 DATE NAME OF PROFESSOR KUDLER FINE FOODS STRATEGIC PLAN 2 Kudler Fine Foods Strategic Plan Kudler Fine Foods has the opportunity to be the best purveyor of fresh and prepared gourmet and organic foods in the region. Before Kudler Fine Foods (KFF) can be the best they must put assemble a strategic business plan that conveys what strategies KFF will undertake. The role of the strategic plan is to convey a set of decisions and actions that an organization will implement to achieve the company’s objective (Pearce & Robinson, 2009). In this paper Team C will explain some different strategies that KFF can use and select the best strategy. Alternative Strategies Horizontal Integration Kudler Fine Foods (KFF) has a desire to grow its business faster. One strategy that KFF can utilize is horizontal integration. Horizontal integration is “[a] grand strategy based upon the growth through acquisition of similar firms operating at the same stage of productionmarketing chain” (Pearce & Robinson, 2009, p. 218). Horizontal integration strategy advantages allows KFF to expand its business geographically like to Los Angeles or San Francisco, increase market share, provide economies of scale, gain control of knowledgebased resources, expansion of product lines, and possible increase KFF’s use of capital (Pearce & Robinson, 2009). In addition, the benefits of a horizontal integration can be achieved with moderate risks since the success of the expansion is dependent upon the proven abilities of the store that would be acquired. A horizontal integration strategy does have some possible risks. One risk is that the horizontal integration causes a monopoly in the region, an antitrust suit maybe brought against and organization. However, this should not be an issue with KFF because it is relatively small. KUDLER FINE FOODS STRATEGIC PLAN 3 Another issue with horizontal integration is the integration must be handled correctly or the acquisition could lose customers due to bad customer service and/or disruptions of service (Internet Center for Management and Business Administration, 2009). Market Development KFF’s desire to expand is based on market development. As KFF expands throughout the country their existing products will be well received by new consumers. When expanding one hopes to increase sales and profit although faced with uncertainty. Not expanding to quickly is important so cost stay in control. Self assessing company resources such as staffing, operations, and materials will be important before expanding. Once the decision to expand has been made based on current products and services then a market assessment will be performed. The assessment will determine if the potential market has customers interested in KFF products and services. Once entering the market one must think how the products and services will be introduced. The roll out approach of stores instead of opening all stores at once is deemed best. Expansion Another strategy for Kudler Fine Foods to implement is moving forward with expansion. Kathy has already been scouting locations based upon median income of residents to find the most ideal areas for possible stores. Opening a new location in the Carlsbad location would be an ideal move for Kudler. The area is highly populated and this will give Kathy the opportunity to close the Del Mar location, which is not performing as well as the other two stores. Kudler Fine Foods also offers a catering service, which turns a good profit, but Kathy has not much time into marketing the service. The catering service would be a great marketing tool for Kudler because it will give potential customers who are not familiar with Kudler the opportunity to see what kind KUDLER FINE FOODS STRATEGIC PLAN 4 of products the store offers. Applying some time and more effort to the catering service will give Kudler more of a profit and a larger customer base. The catering service will give Kudler the opportunity to get their products in front of potential customers and entice them to visit a Kudler Fine Foods location. Joint Ventures Kudler Fines Foods expansion efforts can be successful through joint ventures. As stated by Pearce and Robinson, “Commercial companies created and operated for the benefit of co owners; usually two or more separate companies that form the venture” (2009, p. 269). KFF’s desire to expand comes with many risks because of uncertainty. To eliminate the risk, joint ventures are formed creating a competitive advantage. The benefits of the joint venture are shown in access to local resources and local borrowing powers. The knowledge ones partner supplies in a new geographical area is priceless. The cliental is established; revenues, cost and assets can be accurately forecasted. Not only can the joint venture strength KFF position in a new market it can strengthen their position in their current market by market strength of the partner. Now with KFF expanding with less risk the joint venture can take both companies into completely unexplored markets, which are deemed riskier. Even with failure possible in the new market the risk is less because it is shared in the joint venture. Best Strategy The authors of this paper believe that joint ventures are the best strategy for KFF to take now. It will allow them to create a competitive advantage, offer better products and pricing to their consumers and increase their market share. The ability to have a joint venture will reduce KFF liability and risk management. KFF can explore new markets that once were deemed KUDLER FINE FOODS STRATEGIC PLAN 5 untouchable. A joint venture would not require a large investment. KFF could keep overhead low while reducing costs and increasing profitability. KUDLER FINE FOODS STRATEGIC PLAN 6 Conclusion As Kudler Fine Foods enters the expansion phase of their existence, all stakeholders, from the customers, employees, community, and shareholders of KFF will be considered. By considering the alternative strategies of horizontal integration, market development, expansion, and joint venture, KFF will be successful in expanding. The expansion decision based on sound judgment will use the alternative strategy of joint venture to expand. Announcing a joint venture with another successful company in targeted market will allow KFF to reduce risk and create stakeholder value. KUDLER FINE FOODS STRATEGIC PLAN 7 References Internet Center for Management and Business Administration (2009). Retrieved March 13, 2009 from http://www.quickmba.com/strategy/horizontalintegration/ Pearce, J. A. & Robinson, R. B. (2009). Strategic management (11 Ed.) New York: McGrawHill/Irwin.
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