At this moment, Big Bread is one of the largest retailers of bread in the country. This organization can choose from several options. On the one hand, they can try to increase their presence in the market and subsequently face the opposition of large international competitors.
On the other hand, they can consolidate by merging with some smaller companies, for instance, with their franchisees. This paper is aimed at discussing the future strategies of this enterprise. In particular, it is necessary to focus on their external environment, competition, and the ways in which they can strengthen their position in the market.
The strategy statement must reflect the main goals and priorities of the enterprise. In the case of Big Bread, the strategy statement can be as follows: to become the leading retailer of high quality bakery products in the domestic market. In the following sections of this report, we will explain the rationale for this objective.
Overall, the main tendency among food manufacturers and retailers is to emphasize the nutritional value of their products, and, most importantly, their safety (McElhatton & Marshall 2007, p. 53). This tendency can be explained by the increasing monitoring by various governmental agencies.
Currently, food manufacturers have to meet the highest production standards. Additionally, modern customers have also become more aware about the risks of consuming unhealthy food (Budde, Felcht, & Frankemolle 2006, p. 100). Thus, by focusing on the healthfulness and nutritional aspects of their goods, these organizations try to create extra value. This tendency can be relevant to the management of Big Bread.
Additionally, we need to speak about the trend of many food companies to diversify their products. The representatives of baking industry also try to expand the range of their products that they sell to the customers (Suas, 2008, p. 122). For example, they often offer various kinds of bread-rolls, pastries, cakes, tarts, and so forth. To a great extent, this strategy enables them to increase their market share and attract new buyers.
Finally, one should bear in mind these organizations have to compete with large grocery retailers that are able to offer a wide scope of products at a reduced price. In this case, we can speak about such organizations as Wal-Mart, Kmart, Tesco, and so forth. The presence of such competitors prompts other food competitors to consolidate through acquisitions or merging.
This pattern can be observed in Australia, Europe, and the United States (Hui & Clark 2007, p. 946). This strategy is a response to the increasing economic instability and growing competition. These are the most important global trends that can very important to Big Bread.
First, it should be noted that in recent years the main competitive strategy of Big Bread has been based on franchising and expansion of its distribution network. They added more than 300 stores by allowing small entrepreneurs to use their brand. This approach enabled them to increase their market share.
However, the local market has reached the so-called saturation point. At the given moment, Big Bread cannot expand any further without eroding the market share of larger competitors. One should bear in mind that the industry in which this organization operates becomes more consolidated.
For instance, the local market is dominated by three companies whose market share constitutes 25 percent. The main issue is that the competitors of Big Bread are owned by large international companies. This organization is hardly able to compete with them by means of price-differentiation. This is the reason why it is dangerous for the Big Bread to encroach on their market share.
It seems that the main venture opportunity for this company is to form alliances with the main suppliers of flour, salt, sugar, baking soda, and so forth. This will enable them to better monitor the quality of the products and expand their production line. More importantly, they should merge with smaller bakeries in order to increase the scale of their production. Thus, we can say that they scale and scope will be the most important preconditions for the success of Big Bread.
In order to better understand the capabilities of this organization, the main stakeholders of Big Bread should answer some of these questions. They are as follows:
What are the main strengths of the organization?
To what extent are customer’s loyal to it?
What attracts the customers to the products of Big Bread, for instance, variety, quality, the location of shops, or something else?
What are the areas of this company that need improvement?
How can this company be compared to major competitors? What are the obstacles preventing Big Bread from increasing their market share?
What kind of partnership or alliances can increase the position of Big Bread in the market?
These questions will be particularly important for the capabilities report. They are related to the structure of this company, its products, competitive environment, and strategies.
Overall, it is possible to single out several capabilities of this organization. First, one has to speak about its large distribution network. As it has been pointed out they added 300 hundred stores within the last three years. To a great extent, it gives them competitive advantage over other enterprises. Moreover, one can also assume that their brand is quite familiar and popular among the local customers. The popularity of their brand is the main reason why many small entrepreneurs want to become their franchisees.
At this stage, the main focus of the company should be the variety and quality of their products. They can enlarge their market share not only by increasing the number of shops. They can also do it by offering a wider range of breads and pastries, for instance, croissants, bagels, baguettes, buns, and so forth. By adopting this marketing strategy the company will be able to attract a larger number of domestic clients.
This enterprise should increase the scope of production and maintain their high quality (Grant, 2005, p. 323). This is why in the previous section we have argued in favor of forming strategic partnership with the suppliers of flour, salt, sugar, and so forth. These are the main goals that they need to attain. Furthermore, by consolidating with its franchisees and other smaller bakeries, this company can intensify their production rates.
Big Bread has to adjust itself to the forces of competition. Their market tends to be more and more consolidated. Under the circumstances, the best strategy for them is consolidation and expansion of the scope of their products. In this way they will succeed in increasing their market share. Most importantly, they will manage to withstand the completion of international retailers.
Budde, F., Felcht, U., & Frankemolle H., 2006 Value creation: strategies for the chemical industry. Munich: Wiley-VCH.
Grant R., 2005. Contemporary strategy analysis. London: Wiley-Blackwell.
Hui, H. & Clark. S., 2007. Handbook of Food Products Manufacturing: Principles, bakery, beverages, cereals, cheese, confectionary, fats, fruits, and functional foods. NY: Wiley-Interscience.
McElhatton, A, & Marshall R., 2007. Food safety: a practical and case study approach. NY: Springer.
Suas, M., 2008. Advanced bread and pastry: a professional approach. NY: Cengage Learning.