marketing strategic analysis: alfa pastry sa case study

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This report aims at providing a strategic management analysis of Alfa Pastry S. A., one of the most important players, operating in the Greek frozen processed food industry. As it happens with most of Greek companies, Alfa operates in a turbulent economic and political environment. At the same time, Greek consumers emphasize on low prices and high quality of food products. Thanks to its quality and innovativeness, Alfa has managed to significantly improve its growth sales since 1998. However, its uncompetitive position in the associated industry ranking, as well as the threats it has to face, imply that the company needs to make steps towards improving its current position. Market development, effective promotion, development of online sales, product differentiation, and excessive internal financial control are only some of the ways in which Alfa could enhance and maintain its future growth and competitiveness. This case study starts by briefly presenting the company profile of Alfa Pastry. Then, an analysis of the external and internal environment surrounding the company’s business takes place, paying particular attention to the company’s sources of competitive advantage, its strengths and weaknesses, as well as the dynamics of its external environment that have an impact on Alfa’s strategy. After the analysis, the project summarizes the key points and recommends ways in which the company could confront competition and ensure its future growth. Alfa Pastry Alfa is one of the most important producers of pastry-related products in Greece. The company was founded in 1965 in Kozani in Northern Greece by Mr. Athanasios Koukoutaris. It offers a wide range of retail and catering products, namely traditional pies, various types of pastry sheets, pizzas, and a wide variety of bakery products, such as traditional Greek bougatsa, brioche, and croissants. Specifically, Alfa operates in three sectors, namely retail (92 different products), food service (135 different products), and both retail and food service sectors in foreign markets, reporting significant sales growth since 1998). Nowadays, Alfa operates four production plants in Greece, Romania, Serbia, and the United States, while its sales network consists of 50 distributors and around 11.000 points of sales across the world.

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  • Strategic Analysis of Alfa Pastry SA Page. 1 M.Sc in Marketing Management Strategy & Leadership in Marketing Stategic Analysis of Alfa Pastries S.A SPYROS LANGKOS ID: 100285557 Tutor: Mr. Nikolaos Kitonakis Athens, May 2014
  • Strategic Analysis of Alfa Pastry SA Page. 2 Pastry is different from cooking because you have to consider the chemistry, beauty and flavor. It's not just sugar and eggs thrown together. I tell my pastry chefs to be in tune for all of this. You have to be challenged by using secret or unusual ingredients. Ron Ben-Israel Famous Israeli pastry chef
  • Strategic Analysis of Alfa Pastry SA Page. 3 TABLE OF CONTENTS 1] INTRODUCTION ....................................................... 4 2] COMPANY PROFILE................................................... 5 3] EXTERNAL ENVIRONMENT ANALYSIS.............................. 6 4] PORTERS 5 FORCES ANALYSIS .................................... 9 5] COMPETITION ........................................................11 6] MARKET ANALYSIS...................................................12 7] INTERNAL ENVIRONMENT ANALYSIS .............................13 8] FUTURE GROWTH RECOMMENDATIONS .........................16 9] REFERENCES..........................................................19 10] APPENDICES.........................................................20
  • Strategic Analysis of Alfa Pastry SA Page. 4 1. INTRODUCTION This report aims at providing a strategic management analysis of Alfa Pastry S. A., one of the most important players, operating in the Greek frozen processed food industry. As it happens with most of Greek companies, Alfa operates in a turbulent economic and political environment. At the same time, Greek consumers emphasize on low prices and high quality of food products. Thanks to its quality and innovativeness, Alfa has managed to significantly improve its growth sales since 1998. However, its uncompetitive position in the associated industry ranking, as well as the threats it has to face, imply that the company needs to make steps towards improving its current position. Market development, effective promotion, development of online sales, product differentiation, and excessive internal financial control are only some of the ways in which Alfa could enhance and maintain its future growth and competitiveness.
  • Strategic Analysis of Alfa Pastry SA Page. 5 2. COMPANY PROFILE The aim of this project is to provide a detailed report regarding Alfa Pastry from a strategic management and marketings perspective. This case study starts by briefly presenting the company profile of Alfa Pastry. Then, an analysis of the external and internal environment surrounding the companys business takes place, paying particular attention to the companys sources of competitive advantage, its strengths and weaknesses, as well as the dynamics of its external environment that have an impact on Alfas strategy. After the analysis, the project summarizes the key points and recommends ways in which the company could confront competition and ensure its future growth. Alfa Pastry Alfa is one of the most important producers of pastry-related products in Greece. The company was founded in 1965 in Kozani in Northern Greece by Mr. Athanasios Koukoutaris. It offers a wide range of retail and catering products, namely traditional pies, various types of pastry sheets, pizzas, and a wide variety of bakery products, such as traditional Greek bougatsa, brioche, and croissants. Specifically, Alfa operates in three sectors, namely retail (92 different products), food service (135 different products), and both retail and food service sectors in foreign markets, reporting significant sales growth since 1998). Nowadays, Alfa operates four production plants in Greece, Romania, Serbia, and the United States, while its sales network consists of 50 distributors and around 11.000 points of sales across the world (Alfa Pastry, 2013).
  • Strategic Analysis of Alfa Pastry SA Page. 6 3. EXTERNAL ENVIRONMENT ANALYSIS PEST Analysis Political conditions The political conditions of Greece are mainly characterized by the implementation of the two packages of austerity measures by the Greek governments after 2009. These measures implied the cut in wages and pensions, as well as cutting several employment rights and benefits of Greeks, thereby causing an overall political instability over the last three years. As far as the food industry as a whole is concerned, very strict legislation rules Greek food manufacturers, not only in terms of their products and packaging, but also in terms of their production processes, especially as far as environmental protection issues are concerned. EFET is the main governmental authority occupied with regulating food manufacturers, and those that are not certified with ISO:2001 quality certification are subject to serious financial penalties and even closure (Euromonitor International, 2014). Economic conditions The Greek economy is expected to suffer the seventh year of recession, with the countrys GDP being expected to decline by 0.8% in the end of 2014. It is estimated that, in order for the countrys debt to become affordable, Greece needs to report an average growth of 3% from 2014 to 2021. As far as unemployment is concerned, this is expected to reach 27.1 in the end of 2014, slightly improved than the 27.4% of 2013. As a result of the turbulent economic conditions in Greece over the last three years, Greek consumers have seen their disposable incomes diminishing by 35%, while the country ranked last in the World Banks Ease of Doing Business 2013 report (Euromonitor International, 2014).
  • Strategic Analysis of Alfa Pastry SA Page. 7 This has been a very important indicator of the difficult and risky business environment that Greece has formed due to the economic crisis it faces, as well as lack of competitiveness and corruption (Euromonitor International, 2013). Social conditions The numerous consecutive years of crisis have led Greek consumers becoming very price-sensitive, as well as cutting down on their spending, making their household budgets even tighter, and seeking for offers and discounts. As far as food products are concerned, Greeks are highly sensitive in health issues, their preference for fresh and qualitative food being at the forefront, especially when it comes to purchase food products for their children. Despite the fact that private label products are still perceived as of inferior quality to branded ones, a switch towards private-label food products has been observed in Greece, mainly due to their lower price. At the same time, Greek consumers have become very sensitive with the origin of the food products they purchase. They have switched towards purchasing products made by Greek food manufacturers, as a means of supporting Greek economy and Greek employment (Euromonitor International, 2014).
  • Strategic Analysis of Alfa Pastry SA Page. 8 Technological conditions The information and communications technology in Greece is quite developed. The Greek government has employed its Digital Strategy 2006- 2013, aiming at giving the incentives to Greek enterprises to develop ICT infrastructure, in order to meet European standards. Mobile phone processions and Internet connectivity have also been improved in Greece households, compared with 2007, but there are still below the European averages, major reasons for that being the lack of Internet connections in many Greek islands, as well as lack of computer skills from an important part of the Greek population. As it is clear, the development of the Internet has been the most important technological development in Greece during the last decade, which has given companies the opportunity to create new online sales and marketing platforms. At the same time, the Internet has given Greek consumers the ability to quickly identify what is offered in international markets, thereby having become more demanding. (Euromonitor International, 2013)
  • Strategic Analysis of Alfa Pastry SA Page. 9 4. PORTERS 5 FORCES ANALYSIS Bargaining power of buyers The bargaining power of buyers is high in the Greek frozen processed food industry. Indeed, consumers have the opportunity to select the particular food products from a number of different manufacturers, and switch to alternative ones, if they are satisfied with their current suppliers for any reason. Bargaining power of suppliers The bargaining power of suppliers is low in the particular sector. Thanks to globalization and the diminishing trade barriers, food manufacturers have the option to select the suppliers of their raw materials and ingredients from any part of the world. Domestic suppliers have higher negotiating power, due to the manufacturers emphasis on selecting ingredients that are locally produced, in order to keep up with the associated consumer trend. Threat of substitutes The threat of substitutes is really high in the frozen processed food industry in Greece. The most important and direct substitute is identical, though fresh, food, which consumers can purchase on a regular basis, but just cannot store in big quantities and for long time periods. Except for that, any other food product could be considered as an indirect substitute of pasty and other forms of frozen foods. Last but not least, eating out or ordering food could also be perceived as indirect substitutes, in cases whereby Greek