Strategic Plan Update Str 581.Doc
Strategic Plan Update Amy Chin STR/581 October 25, 2010 Charlotte F Strategic Plan Update—Final Version Executive summary Kudler fine foods is a premium food retailer whose business is primarily based on sales of bakery, meat, seafood, produce, dairy, and wine. It has ambitious plans but the tightening economy threatens its quality proposition and further expansion. A strategic focus on Kudler fine foods is to improve the level of convenience offered to customers. This strategy would enable its customers to buy more of what they want at Kudler fine foods.
Facing the fierce global market competition, Kudler fine foods launches the developing innovative choices for consumers. With the concept of customers as “the foundation of growth”, Kudler fine foods helps its customers make healthy choices and increases focus on digital communication. Company background Kudler Fine Foods was established in 1998 when Kathy Kudler fulfilled her vision of establishing her own gourmet food store. Since the beginning, In order to get the best price possible for products, Kathy buys in bulk for all three stores.
Kathy intends to continue providing fine quality foods to the local area, while expanding and opening new stores in the process. Health is at the heart of Kudler fine foods offer. Demand for natural and organic food is rising fast. In keeping with this trend, Kudler fine foods needs to set standards in healthier Kudler products. It will enable Kudler Fine Foods to become a caring, responsible company toward consumers. Another distinctive trend is that online sales have grown at a fast pace in the last decade.
Increasing focus on digital communication will provide a potential channel for Kudler to distribute its products and may in the long run enable it to test new products. Organizational mission, vision, and value statements Mission – Kudler Fine Foods’ roadmap starts with its mission, which is enduring. * To be a nationally recognized leader in premium quality gourmet foods. * To help people eat and live better Vision – Kudler Fine Foods’ vision captures the essence of who they are. It also captures the importance of health and wellness, but it also embodies all the ways people can eat and live better. People: Be a great place to work where people are inspired to be the best they can be. * Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value. * Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities. Values – Kudler Fine Foods’ values serve as a compass for our actions. Innovation – Satisfying real-life needs with unique ideas Quality – Fulfilling a promise to deliver the best Safety – Ensuring high standards in every products Respect – Caring for people, communities and the environment Integrity – Doing the right thing
Openness – Listening to the ideas of others and encouraging an open dialogue Environmental Scan Strategic planning of Kudler Fine Foods begins with Kathy Kudler’s vision regarding the future of Kudler Fine Foods. Strategic planning of Kudler Fine Foods must enable the company to exploit environmental opportunities or neutralize environmental threats. According to Barney (2007), to generate economic profits for Kudler Fine Foods, the company must be appropriately reorganized to realize the full competitive potential of its resources and capabilities.
Monitoring environmental trends and patterns is important in strategic planning process in today’s times of uncertainty. The business environment refers to all the forces or factors that affect the activities of the firm. Because the internal and external environments of organization are changing all the time, companies must keep up with changes. When the business environment changes, companies that do not change their way of doing business eventually will not survive for long. The internal environment refers situations that occur inside the business, and are generally under the control of the company.
According to Kloviene and Gimzauskiene (2009), the main factors in the internal environment are corporate governance structure, organizational culture, management style, and employees. Kudler Fine Foods intends to continue providing high quality foods to the local area. The owner of Kudler Fine Foods encourages her employees to be friendly and helpful to the customers. Kudler Fine Foods strive to provide a workplace that develops and fosters new learning, ideas, interests, and strengths. Consequently, Kudler Fine Foods should integrate best practices into workplace, and concentrate on the corporate strategies.
The external environment refers situations that occur outside of the company and are by and large beyond the control of the company. After assessing changes in the external environment, Kudler Fine Foods should identify the available opportunities for the strategic planning. According to Kloviene and Gimzauskiene (2009), the main factors in the external environment are the industry outlook, competitors’ strategy, customer behavior, state of the economy, government regulations, social trends, and technological changes. In a competitive environment, Kudler Fine Foods should continually adapt to changes in the market.
Organic foods are attracting unprecedented attention from consumers because safe and healthy food continues to be the trend and the customers are very serious about food safety. The market potential will be higher in the future because chemical-free and locally grown food is in high demand. Thus, safe and healthy food will continue to be the trend. In response to the customers’ demands, Kudler Fine Foods need to understand customer purchase patterns. Customers afford to pay gourmet prices for better quality and healthy products and the greater variety.
Kudler Fine Foods needs to focus on enhance customer satisfaction with goods and services. Furthermore, it is to stimulate long-term customer loyalty, too. According to Barney (2007), gaining access to new customers for Kudler Fine Foods’ current products can increase its volume of sales. According to Kotler and Keller (2006), Kudler Fine Foods needs to develop specific profiles for target markets using demographic variables such as age, marital status, income, gender, and race. Kudler Fine Foods’ primary consumer targets would be health-conscious women who have safety and quality concerns.
After environmental scan, Kudler Fine Foods must realize its full potential and manage corporate risk to develop new core competencies. Therefore, it is important for Kudler Fine Foods to be aware of the environmental factors, keep track of changes in the environment, and forecast its future, so as to succeed and gain the competitive edge. Recommendation for the best strategy for Kudler Fine Foods Kudler Fine Foods has many strategies for its future. Any strategy selected should maximize strengths of Kudler Fine Foods while limiting its weaknesses. Kudler Fine Foods needs to go beyond competing in established industries.
To seize new pro? t and growth opportunities, Kudler Fine Foods also needs to create greater value to its customers. To achieve this, Kudler Fine Foods must understand the current status and see the future in the present. Implementation plan Objectives give the business a clearly defined target. Setting objectives involves a continual process of research and decision-making. It enables the business to measure the progress toward to its stated aims. New Kudler Fine Foods objectives are to provide products and services that satisfy customer needs through developing innovative choices for the Kudler Fine Foods consumers. Functional tactics identify the specific activities to be undertaken in each functional area and thus allow operating managers to work out how their unit is expected to pursue short-term objectives” (Pearce & Robinson, 2009, p. 310). Consumer trends survey, partnership with organic producers, and a radio ad campaign can be good tactics for new Kudler Fine Foods strategy plan. “Action items are usually critical to moving the project forward, even though they do not appear on the formal project plan. Action items and tasks are very similar.
It is efficient to have an integrated system to track them together, instead of maintaining two separate systems or lists” (Chin, 2004). Managers often attempt to identify significant milestones that will be reached during strategy implementation. These milestones may be critical events, major resource allocations, or the passage of a certain amount of time. “The milestone reviews usually involve a full-scale reassessment of the strategy and of the advisability of continuing or refocusing the firm’s direction” (Pearce & Robinson, 2009, p. 414). lt; Tasks, action items, and milestones > [pic] “Resource allocation is the process of allocating resources among the various projects or business units. Better quality financial reporting plays an important role in facilitating the efficiency of resource allocations” (FRANCIS, J. R. et al. , 2009). < Tasks, resource allocation, and deadlines > [pic] “The work breakdown structure defines the hierarchy of project tasks, subtasks, and work packages” (Chase, Jacobs, & Aquilano, 2006, p. 76). Kudler Fine Foods is trying to be a leading source of food innovation.
The innovation would enable Kudler Fine Foods to maintain relevance in a market dominated by larger supermarket chains, which have the significant buying power that can be used to maintain price leadership. < Work breakdown structure > [pic] 1 Developing innovative choices for the Kudler Fine Foods consumers 1. 1 Helping customers make healthy choices 1. 1. 1 Setting standards in healthier Kudler products 1. 1. 1. 1 Removing all artificial preservatives from all Kudler products 1. 1. 1. 2 Eliminating all artificial additives from all Kudler products 1. 1. 1. 3 Setting salt-reduction targets 1. 1. 1. Reducing the levels of salt in all Kudler products 1. 2 Increasing focus on digital communication 1. 2. 1 Setting up e-commerce business unit 1. 2. 1. 1 Launching new Kudler Kitchen website 1. 2. 1. 2 Offering recipes on Kudler Kitchen website 1. 2. 1. 3 Offering special discount on Kudler Kitchen website “Gantt chart shows in a graphic manner the amount of time involved and the sequence in which activities can be performed” (Chase, Jacobs, & Aquilano, 2006, p. 94). < Gantt chart > [pic] Key success factors for plan implementation Kudler Fine Foods should have critical success factors such as management ommitment, the clear understanding of customer requirements, and interdepartmental cooperation. The success of the strategy execution depends on effective communication systems and the mindset required adapting to an entirely new implementation plan. The organizational power structure is also important because it influences decisions regarding the allocation of all kinds of resources necessary for strategy execution. “If those in power do not care about or even resist execution of the strategy, the success of the implementation process is clearly jeopardized” (Cater et al. , 2010).
Furthermore, proper leadership skills are also needed to ensure employees will execute the selected strategies. Budgeting should strive to support the decision making process. The cash budget is the most accurate and commonly used method for forecasting. A cash budget essentially maps out the cash flows. The primary cash inflows for a company consist of cash sales and collection of accounts receivable. An accurate sales forecast is a necessity if Kudler Fine Foods are to construct an accurate cash budget. The primary cash outflows are generally payments on purchases, labor costs, and capital purchases.
Other large payments may include rent and taxes. The cash outflows must be estimated regarding the amount and timing of the payments. The critical success factors of forecasted financials would be financial conditions of Kudler Fine Foods, general economic conditions, availability of resources, and competitive situation. Kudler Fine Foods’ banks extend credit terms to Kathy when Kudler Fine Foods is launching a new store. Kathy also sometimes uses her credit line during the summer slow months to help carry the stores through. We have a great credit rating and relationship with our local banks.
If Kudler Fine Foods continues to be successful, Kudler Fine Foods hopes to use its cash flow to expand into this market within the next few five years. Kudler Fine Foods is also looking at expanding into the San Francisco area. Kudler Fine Foods’ ultimate goal is to compete in high-end areas in other cities as well. While KFF doesn’t have any direct competition, there are some businesses that are vying for the same customer base. One such store is Jonathan’s Market located in La Jolla. The main distinction between Jonathan’s and Kudler’s is that Jonathan’s is more focused on its restaurant business and its wine department.
Risk management plan Kudler fine foods are undergoing significant change. Intense competition may force Kudler fine foods rethink or pause in growth because the intense competition may lead to a price war within the food industry. “Risk management includes identifying risks, assessing risk areas, developing risk-handling options, monitoring risks to determine how risks have changed, and documenting the overall risk management” (Eccles et al. , 2007). First, Kudler Fine Foods deals in mainly perishable goods.
Because Kudler Fine Foods does not use any preservatives, approximately 12% of its perishable goods are rotated out of inventory every two or three days, either by being thrown away or donated to local charities. Kudler Fine Foods needs to add more product line as it is growing. Customers are always asking if Kudler Fine Foods carries a specific item or product. If Kudler Fine Foods receives several requests for the same product, Kudler Fine Foods needs to ask its wholesalers if they can provide the product on a trial basis. Second, Kudler Fine Foods may have the opportunity to be acquired.
As Kudler Fine Foods continues to grow, there is always the possibility that another company may acquire Kudler Fine Foods. Kathy could consider such a move in the future as part of her retirement plan. Third, economy could change and customers could stop buying gourmet foods. Organic food costs more than what you normally find in the grocery store. If the economy declines and people’s cash flow is decreased, customers may purchase fewer Kudler Fine Foods’ products. There is the risk of a major competitor entering the marketplace and taking market share away. Right now we don’t see this happening.
Trader Joe’s does have some stores in the area but we offer a more diverse and specialized product line for our select customers. We don’t see anyone else opening a gourmet specialty store that would compete with us in the marketplace and try to take our market share away. We have repeat customers who are happy with our service. The objective of contingency planning is to arrange in advance for an event that happens, especially an event that would cause problems if it did happen. First, Kudler must focus on protecting its upper management team’s health and safety. Next, Kudler must develop a “continuity of operations lan that provides for the continued performance of Kudler Fine Foods’ essential functions under all circumstances” (Bartholomew, 2006). As well as securing the continuity of operations, Kudler needs to review any contracts that may have been set up with outside vendors as part of the continuity plan. Once the risks have been identified, Kudler fine foods should constantly communicate the risk status and anticipated needs to external personnel who are in a position to deal with the risks. Further, Kudler fine foods can attach big bonuses to early completion of risk management and big penalties to risk management (Grant, K.
P. et al. , 2006). There is the possibility that the weather could dramatically affect crop yields and our suppliers could dramatically increase the cost of perishable goods to us. This is another area that we can’t control and the effect would be the same to our competitors. Conclusion The new strategy should enable Kudler’s customers to buy more of what they want at Kudler fine foods. The success of Kudler fine foods business depends significantly on the quality of products, the business practices, and favorable consumer perceptions.
In keeping with demand for healthier food and online sales trends, Kudler fine foods should set standards in healthier Kudler fine foods products and focus on digital communication. Cover letter Kudler Fine Foods is committed to providing its customers with the finest selection of products for competitive advantage. But, I think we should find the next advantage. I hope my strategic plan will give Kudler Fine Foods the next advantage for managing new business realities. I believe Kudler Fine Foods should balance the demands of both managing the present and creating the future.
Without a doubt, Kudler Fine Foods must continue to delight its core customers and maximize profits from existing businesses. But Kudler Fine Foods must also secure its future by launching high-growth potential, developing innovative choices for its consumers. I would like to put emphasis on the way to stay ahead, again. The way to capture emerging opportunities is innovation. There is still a great deal of uncertainty. Kudler Fine Foods should continue to examine its organizational approach, strategic planning. Strategic innovation is crucial for long-term growth, even for survival. But ideas are not enough.
Kudler Fine Foods must excel at both innovation and execution. Kudler Fine Foods must succeed in its new and uncertain market. References Barney, J. B. (2007). Gaining and sustaining competitive advantage (3rd ed. ). New Jersey: Pearson-Prentice Hall. Bartholomew, D. (2006, October). Supply chains at risk. Industry Week/IW. Cater et al. (2010). Factors of effective strategy implementation: Empirical evidence from Slovenian business practice. Journal for East European Management Studies. Chase, R. B. , Jacobs, F. R. , & Aquilano, N. J. (2006). Operations management for competitive advantage (11th ed). New York: McGraw Hill/Irwin.
Chin, G. (2004). ACTION ITEM TRACKING PROCESS. Agile Project Management. Eccles et al. (2007, Feb). Reputation and its risks. Harvard Business Review. Vol. 85. FRANCIS, J. R. et al. (2009, Sep). Does Corporate Transparency Contribute to Efficient Resource Allocation? Journal of Accounting Research. Vol. 47. Govindarajan, V. , & Trimble, C. (2006, January/February). Achieving breakthrough growth: From idea to execution. Ivey Business Journal. Grant, K. P. et al. (2006, November-December). Delivering projects on time: Risk management can help managers anticipate the delays that make their development projects late.
Research-Technology Management. Kim, W. C. (2005, Spring). Blue ocean strategy: From theory to practice. California Management Review. Kloviene, L. , & Gimzauskiene, E. (2009). Performance measurement system changes according to organization’s external and internal environment. Economics & Management. Kotler, P. , & Keller, K. L. (2006). Marketing Management (12th ed. ). New Jersey: Pearson-Prentice-Hall. Pearce, J. A. , & Robinson, R. B. (2009). Strategic management: Formulation, implementation, and control (11th ed. ). New York: McGraw-Hill/Irwin. University of Phoenix. (n. d. ). WEB LINK: Kudler Fine Foods Virtual Organization