Chapter 6 Revised
Short Description
d...
Description
Andok’s Litson Manok Corporation 4-BLM Leader: Edzil Cabatay Members: Darien Anthony Nañadiego John Lester E. Navarro Mikko Santiago
Chapter 6 Strategy Formulation This Chapter concerns the strategy formulation of the firm. In many industries, firms are in close competition with the other firms offering the same product. It is important that the firm is able to identify their own strengths and weaknesses in order to develop it and make necessary changes as well as their opportunities and threats so that they can achieve their maximum potential. A) External Factor Evaluation (EFE) Matrix EFE Matrix is an analytical technique related to the SWOT analysis. It is an analytical technique related to the SWOT analysis. EFE Matrix evaluates the external position of the organization or its strategic intent. Table 6.: EFE Matrix of Andok’s Litson Manok Key External Factors
Weight
Rating
Weighted Score
OPPORTUNITIES O1. The numbers if online users have been increasing and most of the numbers are getting information in the internet O2. Enhancement of current products and services to stay in the competition with others O3. Building customer relationship and loyalty to maintain the target market and enhance it through word of mouth O4. Innovation in the use of mobile and computer application in communicating and dealing with andoks, because customers are now moving towards mobile and technology use. O5. Build strategic acquisition/alliances to manufactures and inside business ventures to improve value chain. THREATS
0.20
4
0.8
0.10
3
0.3
0.05
3
0.15
0.10
2
0.2
0.05
4
0.2
T1. There is an intense competition in the food industry specifically in product developing T2. New Entrants in the market” Growth of other “litson manok” food business in the market such as lembest and papa Ed’s T3. Other competitors are 0offering either the same product price or lower than andok’s T4. Health trends changing costumer demands because it is affecting the health in relation of excessive carcinogen and bird flu. T5. Substitute products that ther competitors jave and yet in the same product line.
0.20
4
0.8
0.10
4
0.4
0.10
0
0.05
0
0.05
0
TOTAL:
1.0
Rating Legend: 4 = response is superior, 3 = the response is above average, 2 = response is average, 1 = the response is poor. Weight Legend: range weight from 0.00 (not important) to 1.0 (very important)
Based on the figures shown, the company is relatively positioned as above average with rating of 2.85 on the external environment. The company responded so much on the environmental issues that Andoks is in line in the point of adapting the consumers. The company is driven by such promotions, and marketing resources that the company sustained the growth of its market and sales. Even though Andoks has been offering lower price than other company, Andoks still sustained its growth.
Identification of Key External Factors with High Weighted
Weighted Scores
Scores 0.1. The numbers if online users have been increasing and
0.8
most of the numbers are getting information in the internet 0.3 Building customer relationship and loyalty to maintain
0.15
the target market and enhance it through word of mouth There is an intense competition in the food industry
0.8
specifically in product developing
Analysis of EFE The increase in their sales and company growth highlights a competitive edge to other competitors. It helped the company in surpassing minimal problems in terms of financial and creating brand image. The company is having a better income because of its strategic adaptation in the market.
The adaptability power of Andoks strengthens its brand image in the market serving more consumers that results to an increase on sales.
Table 6.2 Explanation of weights and Ratings of External factors Key External Opportunity Factors O1. The numbers if online users have been increasing and most of the numbers are getting information in the internet O2. Enhancement of current products and services to stay in the competition with others O3. Building customer relationship and loyalty to maintain the target market and enhance it through word of mouth O4. Innovation in the use of mobile and computer application in communicating and dealing with andoks, because customers are now moving towards mobile and technology use. O5. Build strategic acquisition/alliances to manufactures and inside business ventures to improve value chain.
Key External Threat Factors T1. There is an intense competition in the food industry specifically in product developing T2. New Entrants in the market” Growth of other “litson manok” food business in the market such as lembest and papa Ed’s T3. Other competitors are 0offering either the same product price or lower than andok’s. T4. . Health trends changing costumer demands because it is affecting the health in relation of excessive carcinogen and bird flu. T5. T5. Substitute products that ther competitors jave and yet in the same product line.
Weight
Comments on Weight
Rating
Comments on Rating
0.20
The weight of 0.20 is important for Andok’s since they are trying to be innovative in their industry and to be able to form new and improved specialty feeds for their customers
4
The rating of 4 is apt in the current opportunity list of Andok’s Litson Manok since they are still currently working on their specialty feeds.
0.10
The weight of 0.10 is important for the firm since their products—animal feeds is a leading necessity for global food industry, they can utilize this in order to excel. The weight 0.05 is necessary because the livestock and poultry industry is one of the basic needs of human and the industry itself is growing
3
The rating 3 is necessary because feeds play a huge role in healthy livestock and poultry.
3
The rating 3 means that this opportunity is important to the functions of the firm
0.10
The weight 0.10 of Andoks Litson Manok means that they are rising in Asian countries since there is an increasing thread in the income levels of the population
2
The rating 2 means that this opportunity is very important for the growth of Andok’s Litson Manok
0.05
Since there is already a mother company located in Quezon City, the weight is just enough for Andok’s to have a demand in export sales
4
This opportunity is very important since it will greatly impact the increase of profit sales of Andok’s Litson Manok
0.05
Weight
Comments on Weight
Rating
Comments on Rating
0.20
The weight could be lessened if the customers found another alternative to buy feeds from
The rating is 4 because as long as the firm ensures to do their best, they can still claim dominance
0.10
The weight 0.10 is because other firms are slowly penetrating the market
The rating is 4 because it is somewhat important for the firm to ensure that their prices are in agreement with the inflation rates
0.10
The weight is 0.10 because the inflation rates vary depending on other factors
0.05
The weight means that the breeding scale of the local livestock in the Philippines is below production cost
0.05
The weight means that the change in environment may affect the population of hog raisers and poultry keepers
B. Competitive Profile Matrix Critical success factors (CSF) are the key areas, which must be performed at the highest possible level of excellence if organizations want succeed in the particular industry. They vary between different industries or even strategic groups and include
both internal and external factors. In our example, we have included 6 CSF. The more critical success factors are included the more robust and accurate the analysis is. Table 6.3 CPM of Andok’s Litson Manok Critical Success Factor (CSF) CSF1. Branches CSF2. service CSF3. Quality of Products CSF4. Variety of Products CSF5. Price of Products CSF6. Market Positioning Total
Weight .15 .17 .10 .19 .10 .09 1
Andoks Rating Score 3 .45 2 .34 2 .2 1 .19 3 .3 3 .27 1.95
Mang Bok’s Rating Score 1 .15 3 .51 2 .2 2 .38 1 .1 2 .18 2.02
Sr. Pedro Rating Score 2 .3 1 .17 1 1 2 .38 3 .3 2 .18 2.53
weight score: 0.0 (not important) to 1.0 (very important) 4 = Major strength where the response is superior, 3 = Minor strength where the response is above average, 2 = Minor weakness where response is average, 1 = Major weakness where the response is poor.
Identification of the Critical Success Factors with High
Weighted Scores from CPM
Weighted Scores from CPM Your Company: Andok’s Litson Manok Competitor 1: Mang Bok’s Competitor 2: Sr. Pedro
1.95 2.0 2.53
Analysis of CPM: Chooks-to-Go has 23 processing plants across the country, allowing logistical and processing flexibility to match daily orders. A cold-chain system delivers fresh products every day. Food safety is constantly monitored. Chooks-to-go has its similarities with Andoks, but the competitive advantage of the said company has its strategy on their own products and not on how they serve it. Their “no sauce” strategy already gives satisfaction of the customers. Baliwag Lechon Manok has been serving the consumers with same product like Andoks. It is known for its strong advertisements by some artists that made it as a competitive advantage among other retail sale via stalls and markets. The competitive advantage of Sr. Pedro is their price in the market. Their product is cheaper than Andoks and the only thing that the company lacks is the improvement in brand awareness that makes it a good competition between Andoks Litson Manok.
CRITICAL SUCCESS FACTORS Weight CSF1. Branches
.17
CSF2. Service
.09
CSF3. Quality of Products
.10
CSF4. Variety of Products
.19
CSF5. Price of Products
.10
CSF6. Market Positioning
.10
Comments on Weight The brand reputation of the company is very important in determining the success factor of the company Level of Service is not that important in determining the success factor of a company. It is of high importance that a company has high succesful promotions to boost the company’s brand. The Variety of products per employee is important because it deternines whether the product sells. In the poultry industry, a Price of products channels is important so that a product will sell. Strong Market positioning are important for the boost in sales of the product.
Andoks Litson Manok Rating 3
2
3
1
3
3
Comments on Rating
Mang Bok’s Manok Rating
Sr. Pedro
Comments on Rating
Rating
Comments on Rating
The brand reputation of Andok’s has a 1 rating of 3 which indicates that its brand has a minor stregth and above average Level of Service integration is a minor 3 weakness in Andok’s due to current economic status of the company.
Mang Bok’s has a poor rating with its brand reputation for not having quality poultry feeds.
2
Sr.pedro’s reputation on the poultry industry is rather good compare to B-MEG considering it is only starting in the industry.
The Service of Mang Bok’s is rather diverse than other poultry companies.
1
Since Sr. pedro is a new company in this industry their products does not focus on the poultry section.
Andok’s has a rating of 2 with regard 2 to quality of products because it really enter the competitive market of the poultry industry. The Andok’s sales per employee of 2 Andok’s has a major weakness with regard to Variety of products because of rural destinations. The Price of Product channels of 1 Andok’s caters the needs of urban and rural areas.
Mang Bok’s promotes their products to the market that’s why it is their minor weakness.
1
Sr. Pedro is a startup company and rarely promotes their products in the media but rather door to door promotions.
Andok’s has an above average rating 2 with regard to its Market positioning because it accomodates its products worldwide.
The Variety of products per employee of 2 Mang Bok’s is rather high than Andok’s because of the vast network of salesman in the Philippines. Mang Bok’s does not cater into a lot of 3 Price of Product in the country that’s why their products are not well known especially in remote areas. Mang Bok’s does not have a Market 2 positiong channel unlike Sunjin because the company caters to large retail stores only and not worldwide.
Sr. Pedro is competitive with their variety of products per employee although they just started in the industry. Sr. Pedro’s strategy is to allocate different distribution channels in the country that is why it is their advantage to other poultry companies. Market positioning of Sr. Pedro is rather new that is why it is still weak for their system is not yet perfect.
C. Internal Factor Evaluation (IFE) Matrix
IFE Matrix is an analytical technique related to the SWOT analysis. This strategyformulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas. The ratings in internal matrix refer to how strong or weak each factor is in a firm. Table 6.4 IFE Matrix of Andok’s Litson Manok Key Internal Factors
Weight
Rating
Weighted Score
STRENGTHS S1. Andok’salready built its brand reputation because it has been in the market for 30 years S2. They don’t only serve roasted chicken but they also serve other food and beverages for consumers’ convenience S3. Andoks has more than 300 stores nationwide to serve the wide market S4. The prices of the products are affordable and reasonable
.15
3
.45
.05
4
.45
.01
3
.3
.01
3
.3
S5. The stores of Andok’s are strategically positioned
.01
2
.2
. 05
1.45
WEAKNESSES W1. Andoks has a weak presence in the online market because they lack in utilizing the computer information system. W2. The market is not aware of the delivery service rendered by Andoks W3. Limited use of marketing tools, for promotion and advertisements
.02
2
.04
.05
1
.05
.01
2
.02
W4. Andoks has a weak supply chain that affects the stock per day causes shortage a d limited choice in the menu W5. Challenges regarding the product: such as size, taste, and packaging
.01
1
.01
.05
2
.01
TOTAL:
1.0
Rating Legend: 4 = major strength, 3 = minor strength, 2 = minor weakness, 1 = major weakness. Weight Legend: range weight from 0.00 (not important) to 1.0 (very important)
Identification of Key Internal Factors with High
Weighted Scores
Weighted Scores S1. Andok’s already built its brand reputation because it has been in the market for 30 years
0.45
And S2. They don’t only serve roasted chicken but they also serve other food and beverages for consumer’s convenience. W2. The market is not aware of the delivery service rendered by Andoks S3. Andoks has more than 300 stores nationwide to serve the wide market And S4. The prices of the products are affordable and reasonable
0.5 0.3
2.3
Analysis of IFE: The company has an IFE rating of 2.3 which mean that the company is below average position and does not meet the mark of midpoint rate of 2.5 that simply explains that they have a weak internal factor of the business.
Table 6.2 Explanations of weights and ratings of Internal Factors Key Internal Strength Factors
Weight
S1. . Andok’salready built its brand reputation because it has been in the market for 30 years S2. They don’t only serve roasted chicken but they also serve other food and beverages for consumers’ convenience S3. Andoks has more than 300 stores nationwide to serve the wide market S4. The prices of the products are affordable and reasonable
.15
S5. The stores of Andok’s are strategically positioned
Comments on Weight
Rating
Comments on Rating
This has the highest weight or the most important strength. Because, of the Company’s long time existence it does dominate the market by their popularity To its average rating, Andoks product convenience has an average contribution to the company in order to sustain every affiliates and nationwide convenience to its consumers
3
The development of the company is not enough in building brand reputation even though they conquering the market in almost 30 years
4
Andoks offering other products such as liempo, bangus, fried chicken, pepsi products (beverages) other than specialty, roasted chicken (litson manok)
.01
Andoks many branches does not create an impact in the development of the company
3
It is not enough to sustain the rapid growth of the company
.01
Andoks prices may not meet the consumers daily budget
3
The price is affordable but the customers is not satisfied with the products that they are offering
.01
Due to the existence of other outlets that also sells roasted chicken, Andoks position is not really strategically positioned.
2
The strategic positioned said that it only targets their potential customers and not targeting the new market as well.
.05
Key Internal Weakness Factors
Weight
W1. Andoks has a weak presence in the online market because they lack in utilizing the computer information system W2. The market is not aware of the delivery service rendered by Andoks W3. Limited use of marketing tools for promotions and advertisement W4. Andoks has a weak supply chain that affects the stock per day causes shortage and limited choice in the menu W5. Challenges regarding the product : such as size, taste, and packaging
.02
Comments on Weight Andoks must improve in their online penetration as new generation would likely rely on online markets
Rating 2
Comments on Rating The company’s computer information system is not up to date an not functioning well as the need of customers in gathering imformation
.05
To its average rating, Andoks must improve their dissemination of information to the market
1
There is a weak implementation of Andok’s in disseminating information about the delivery system. Only selected places are serve by this delivery system.
.01
Andoks must take advantage in their resources to continuously promote their product
2
.01
Andoks must not rely to only one supplier.
1
Andoks has a weak marketing resource in promoting their products and buulkding brand image. There is also a lack of financial department of Andoks company The stores of Andoks is having a problem with their stocks that results a decline in meeting the demands of the customers
.05
Andoks must take advantage in their resources to continuously promote their product
2
The process of the products of Andoks is not consistent when producing by other outlet stores
D. STRENGTHS -WEAKNESSES -OPPORTUNITIES -THREATS (SWOT) M ATRIX The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix is an important matching tool that helps managers develop four types of strategies: SO (strengthsopportunities) Strategies, WO (weaknesses-opportunities) Strategies, ST (strengthsthreats) Strategies, and WT (weaknesses-threats) Strategies. Matching key external and internal factors is how one will develop a SWOT Matrix and making such requires good intuition and judgment.
Figure 6.5: SWOT Matrix of Andok’s Litson Manok
INTERNAL FACTORS
EXTERNAL FACTORS OPPORTUNITIES O1. The numbers of online users have been increasing and most of the numbers are getting information in the internet O2.Enhancement of current products and services to stay in the competition with others O3.Building customer relationship and loyalty to maintain the target market and enhance it through word of mouth O4.Innovation in the use of mobile and computer application in communicating and dealing with Andoks, because customers are now moving towards mobile and technology usage O5.Build Strategic acquisition/alliances to manufactures and inside business ventures to improve value drain.
THREATS T1-There is an intense competition in the food industry specifically in product developing. T2-“New Entrants in the market” growth of other “litson manok” food business in the market such as Lembest and Papa Ed’s T3-Other competitors are offering either the same product price or lower than Andoks. T4-Health trends changing customer demands because it is affecting the health in relation of excessive carnicogen and bird flu. T5-Substitute products that other competitors have and yet in the same product line.
STRENGTHS S1. Andoks already built its brand reputation because it has been in the market for 30 years S2. They don’t only serve roasted chicken but also they sell other food and beerages for consumers’ convenience S3.Andoks has more than 300 stores nationwide to serve the wide market S4. The prices of the products are affordable and reasonable S5.The stores of Andoks are strategically positioned. S-O STRATEGIES SO1- Andoks strategically positioned itself to its target market, the company is engaging in “product activation” which is targeting its potential consumers. Through “Product Activation” they easily introduce their products such as rice toppings and dokite rice box (S5,O2,O3) SO2-Utilize the use of internet and social media in spreading information about the products and services of Andoks such as improving the site andoks.com.ph, efficiency aof the application they are using (food panda) prmos, dissemination of information about the new products, and availability of stores in different locations. (S3,O1,O4) SO3-“Dine-in restaurant” Andoks only have chosen store that offers dine-in and take-out. The consistency of the services offered by Andoks will surely increase their profit and expansion of stores targeting also the busy consumers along the streets. (S3,S4,O3,O5)
S-T STRATEGIES ST1-Product price must be on standard so that every class in the society can afford Andoks. (S4,T3) ST2-Andoks must prove their dominance by taking over the market before the “new entrants” starts to penetrate the market. (S1,T2)
WEAKNESS W1.Andoks has a weak presence in the online market because they lack in utilizing the computer information system W2. The market is not aware of the delivery service rendered by Andoks W3.Limited use of marketing tools for promotions and advertisements W4.Andoks has a weak supply chain that affects the stock per day causes shortage and limited choice in the menu. W5.Challenges regarding the product: such as size, taste and packaging W-O STRATEGIES TW1-The innovation in the use of technology will help increase promotional activities through active engagement in social media. This will intensify the competition in the wide spreading of information. (W1,W2,T2) TW2-Neutralize the spices and the raw materials used in their product for consistency in every branch of Andoks. (W5,T5) TW3-Wide spread dissemination of information about the delivery services rendered by Adnoks through flyers in every in-store purchase and use of social media. (W2,W3) TW4-Through strategic alliance with Magnolia, Andoks will ensure the healthiness and quality of poultry used in the production of the chicken and pork for the consumers’ health awareness. This will benefit in controlling the number of stocks used per stores. (W4,W5,T4) TW5-Andoks will take in to pride that the company has been serving the consumers for years, their services through advertisements to highlight their edge to other competitors. This will benefit the company in grasping the desire of the consumer behaviour in trusting tha alltime favorite of Filipino consumers. (W3,T1) W-T STRATEGIES WT1- Improve Andoks presence in online market, to further disseminate information regarding their new and upcoming products. (W1,T1) WT2-Andoks must make sure that the quality of the food they sell had gone quality check before being sold to the customers. (W5,T4)
Quadrant S.O.
Example of Significant Strategies from the Quadrant Andoks strategically positioned itself to its target market. The company is engaging in “product activation” which is targeting its potential consumers. Through “product activation” they easily
W.O.
introduce their products such as rice toppings and dokito rice box The innovation in the use of technology will help increase promotional activities through active engagement in social media. This will intensify the competition in the wide spreading of
S.T.
information Andoks must prove their dominance by taking over the market before the “new entrants” starts to penetrate the market.
W.T.
Improve Andoks presence in online market, to further disseminate information regarding their new and upcoming products
ANALYSIS OF SWOT: The company’s long time existence in the market gives them so much advantage with regards to popularity and familiarity to the market. Through that, it will establish good relationship with the customers and will surely create loyalty. Having been so, it will also become a channel of marketing for the company as it will eventually create a good brand image to the public. However, the said company must maximize every opportunity they have and improve their services from time to time to cope with the changing environment and maintain their existence in the market.
E. Strategic Position and Action Evaluation (SPACE) Matrix The SPACE matrix evaluates different variables and assigns them a score considering how important they are for the situation of the company. It analyzes four different areas (two internal to the company and two external) that will represent four quadrants in a graphic. The purpose of this matrix is to situate the company in one of these four quadrants and give a suggestion –according to which quadrant results- about what type
of strategies a company should follow: conservative, aggressive, defensive or competitive (medicosmba.com).
Table 6.6 : SPACE Matrix for Andok's Litson Manok Financial Position (FP) Dependent on using its own money as capital instead of borrowing from others Increased total assets
Rate +5
Decreased efficiency in converting accounts in the balance sheet into sales
+7
Future debt rating, high loan rates, future profitability, brand portfolio and cost structure. Showed not much of an improvement over a year
+7
Total Industry Position (IP)
+32 Rate +5
Introduce new products It gives space for a more equal playing field and a fair competition among the players. It allows us to explore advantages to our competitors that is legal, fair and gives protection to our company from possible detractions. The customers of the food companies that Andoks is supplying food ingredients also increases which will result to more supply from Andok's. Business expansion To cater new products Increased food inflation rate The growth of GDP welcomes new competitors It raises the standards of compliance that makes entry of new products harder. Competitors are international companies Competitors have a larger market Because of the high demand on food, it will welcome new competitors to the industry. Total Stability Position (SP) Consistent Philippine GDP growth rate The GDP growth may increase significantly the productivity/sales. It poses more regulations that highly affect the procedures and transactions of the company, requiring more assets to be exerted. The food preference quality (health conscious) may lessen the customers of Andoks’s clients. Total
+6
+7
+3 +3 +4 +7 +2 +5 +4 +2 +2 +7 +5 +49 Rate -6 -5 -2 -3 -16
Competitive Position (CP) Rate Andok's Litson manok is able to provide the resources they need. The company are always able to provide the products without delay. Andok's is a distributor of quality food and service catering to the needs of industries specializing in food production throughout the country. The company are quickly to respond to the needs of their business partners/customers by delivering the product as soon as they order. The employees of the company are able to communicate with each other to discuss what is happening in the company. They offer quality products in the market. They are not able to utilize their resources. They are not able to expand their market. They are not able to advertise their products. The company has a lot of international competitors in the market which has larger variety food products. Traffic is the number one weakness since the company is focused and engage more on delivering the food ingredients to their business partners throughout the country. Total
-2 -2 -1 -2 -2 -2 -2 -3 -1 -2 -2 -21
FP average = 6.4 IP average = 4.0 SP average = -4 CP average = -1.9 X axis: 2.4 Y axis: 2.1
Analysis of SPACE
Figure 6.7 : SPACE Matrix of Company
Based on the findings, the company must be aggressive. The result implies that the company is financially stable and has strong industry position in the market, but is unlikely to make significant returns from the business. Thus, the company must focus on market penetration, market development, product development and related diversification. It tells that the company must improve its current competitive position by developing competitive advantages or focusing on the more attractive niches of the overall market. They should also look outside the current market for profitable opportunities, either building on existing resources and capabilities or diversifying into a new area. F. Boston Consulting Group (BCG) Matrix A planning tool that uses graphical representations of a company’s products and services in an effort to help the company decide what it should keep, sell or invest more in. The BCG growth share matrix plots a company’s offerings in a four square matrix, with the y-axis representing rate of market growth and the x-axis representing market share. The BCG growth share matrix was developed by the Boston Consulting Group (BCG) in the 1970s (investopedia.com).
Figure 6.8 : BCG Matrix of (Company)
Medium 0
Low -20
Industry Sales Growth Rate (Percentage)
Relative Market Share Position High
Medium
1.0
0.50
High +20
Low 0.0
Information and Computations on Related Market Share The formula conducted for computing Related Market share is “Company’s market share/total market share*100” thus, “34/66 = 0.5151 *100=51.51%. Andok's obtained an average of 51.51% as its related market share to the livestock industry here in the Philippines giving the remaining percentage to its competitors. Based on the table shown above, the related market share of Andok's Litson Manok was placed in the medium position varying 0.50 rate. Information and Computations on Industry Sales Growth Rate The formula used herein are as follows; Next year’s sales – Last year’s sales / Last year’s sales *100 thus, 12,000,000 – 10,200,000/ 10,200,000*100 = 17.647 or 18%. This result in a range of +18 on the ISGR., making it at the lower range of +20. Such outcome goes along with the projected sales of 2015 and into the next two years of the company.
Analysis of BCG Andok'sLitsonManok falls to the second quadrant of the BCG matrix which is the STARS. This represents the organization’s best long-run opportunities for growth and profitability. The company obtained a high relative market which is 51.51 % share and a high industry growth rate of 18 range that enables it to receive substantial investment to maintain and strengthen its dominant position. Forward, backward and horizontal integration; market penetration; market development; and product development are appropriate strategies for Andok's consider. G. INTERNAL- EXTERNAL (IE) MATRIX The Internal-External Matrix displays a nine cell that has relative dimension on both IFE and EFE rating. Each cells corresponds recommended strategies such as to grow and build strategies, hold and maintain strategies and harvest and diverse strategies. Figure 6.9: IE Matrix of Company The IFE Total Weighted Score
The EFE Total Weighted Score
2.65
Based
Average
Strong 4.0
High
on
the
I
Weak 2.0
3.0
II
1.0
III
IE
Matrix, it falls in Cell
3.0
V, which means to strategies.
Medium
It
IV
V
VI
hold and maintain its recommends that the sure investment and
selectively.
strategy
2.85
company uphold a would product
be
The 2.0 market Low
1.0
VII
VIII
IX
for
penetration development.
this and
H) Grand Strategy (GS) Matrix The Grand Strategy Matrix displays the recommended strategies for the company. The matrix will weight how rapid or slow the market growth and how weak and strong the competitive position of the company. GS Matrix
Weak Competitive Position
Rapid Market Growth
Quadrant II 1. Market Development 2. Market Penetration 3. Product Development 4. Horizontal Integration 5. Divestiture 6. Liquidation
Quadrant I 1. Market Development 2. Market Penetration 3. Product Development 4. Forward Integration 5. Backward Integration 6. Horizontal Integration 7. Concentric Diversification
Quadrant III 1. Retrenchment 2. Concentric Diversification 3. Horizontal Diversification 4. Conglomerate Diversification 5. Divestiture 6. Liquidation
Quadrant IV 1. Concentric Diversification 2. Horizontal Diversification 3. Conglomerate Diversification 4. Join Venture
St ro n g C o m pe tit iv e P os iti o n
Slow Market Growth
Andok’s Corporation fall on Quadrant IV that recommends concentric diversification, horizontal diversification, conglomerate diversification and joint ventures. Most of the products fall under Quadrant II that recommends market development, market penetration, product development, horizontal integration, divestiture and liquidation.
Analysis of GS Andok's falls under quadrant for which have a slow growth in the industry, but have a strong competitive position. This is because since 2008 Andoks' made a breakthrough in the market nationwide. In quadrant 2 the firm situated is Baliwag, there is rapid growth in the poultry industry but Baliwag does not fight competently with other companies, although they can focus more on product and market development and also market penetration. Under quadrant 1 falls Chooks-to-go, which concludes that they have a very strong strategic position.
I.
Tally of Alternative Strategies from Matching Stage Matrices
1. Forward Integration 2. Backward Integration 3. Horizontal Integration 4. Market Penetration 5. Market Development 6. Product Development 7. Related Diversification 8. Unrelated Diversification 9. Retrenchment 10. Divestiture 11. Liquidation
Analysis of Tally Table
SWOT
SPACE
BCG
X X X X
X X X
X
IE
GS X X X X
X X
X
X X
Total 0 0 1 3 2 3 1 0 0 1 1
The strategies that the company can pursue are market penetration and product development. Market penetration involves to focusing on selling your existing products to increase sales. Product development is focusing on improving the company’s products or services J.
Quantitative Strategic Planning Matrix (QSPM)
Key Factors Opportunities 0.1 The numbers of online users have been increasing and most of the numbers are getting information in the internet. 0.2 enhancement of current products and services to stay in the competition with others 0.3 building costumer relationships and loyalty to maintain the target and enhance it through word of mouth 0.4 innovation in the use of mobile and computer application in communicating and dealing with andoks, because customers are now moving towards mobile and technology use. 0.5 build strategic acquisition/alliances to manufacture and inside business ventures to improve value chain Threats T.1 There is an intense competition in the food industry specifically in product developing T.2 New Entrants in the market” Growth of other “litson manok” food business in the market such as lembest and papa Ed’s T.3 Other competitors are 0offering either the same product price or lower than andok’s. T.4 Health trends changing costumer demands because it is affecting the health in relation of excessive carcinogen and bird flu. T.5 Substitute products that ther competitors jave and yet in the same product line. Total Weight for Opportunities and Threats Strengths S.1 Andok’salready built its brand reputation because it has been in the market for 30 years S2. They don’t only serve roasted chicken but they also serve other food and beverages for consumers’ convenience
Weight
Top Alternative Strategy 1 AS TAS
Top Alternative Strategy 2 AS TAS
Top Alternative Strategy 3 AS TAS
0.20
2
0.4
4
0.8
4
0.8
0.10
3
0.3
0
0
0
0
0.05
3
0.15
0
0
0
0
0.10
4
0.4
0
0
0
0
0.05
2
0.1
3
0.15
3
0.15
0.20
4
0.8
0
0
0
0
0.10
3
0.3
3
0.3
3
0.3
0.10
3
0.3
2
0.2
2
0.2
0.05
2
0.1
0
0
0
0
0.05
2
0.1
0
0
0
0
0.15
4
0.6
4
0.6
4
0.6
0.05
4
0
0
0
0
0
1.00
S3. Andoks has more than 300 stores nationwide to serve the wide market S4. The prices of the products are affordable and reasonable S5. The stores of Andok’s are strategically positioned
Weaknesses W.1 Andoks has a weak presence in the online market because they lack in utilizing the computer information system W2. The market is not aware of the delivery service rendered by Andoks W3. Limited use of marketing tools for promotions and advertisement W4. Andoks has a weak supply chain that affects the stock per day causes shortage and limited choice in the menu W5. Challenges regarding the product : such as size, taste, and packaging Total Weight for Opportunities and Threats Sum Total Attractiveness Score
0.01
3
0
0
0
0
0
0.01
3
1
1
1
1
0.1
0.01
2
0
0
0
0
0
0.2
2
0.4
3
0.6
3
0.6
0.05
2
0.1
2
0.1
2
0.1
0.1
3
0.3
0
0
0
0
0.1
3
0.3
0
0
0
0
0.05
2
0.1
4
0.2
4
0.1
1.00 Sum of TAS 5.75
Sum of TAS 3.05
Analysis of QSPM Ranking of Alternative Strategy 1
2
Alternative Strategy
Sum Total Attractiveness Score
innovation in the use of mobile and computer application in communicating and dealing with andoks, because customers are now moving towards mobile and technology use There is an intense competition in the food
0.4
0.8
Sum of TAS 3.05
industry specifically in product developing Andok’salready built its brand reputation because it has been in the market for 30 years
3
0.6
K) Summary of Strategy Formulation Table 6.11: Summary of Matrices and Evaluations Matrices EFE
Evaluations CPM 5.00
IFE The EFE of the company has 4.50 rating meaning the firm is strong in the competition. The CPM of Andok’s Litson Manok is projected at 1.95 . The IFE of the firm is strong with a 2.65 projected rating.
4.50 4.95 3.62 2.95 2.65 2.54 SWOT
Andok's has a strong brand name operating domestically. However, they have to refine their name in the Philippines.
S W O T
Horizontal Integration
SPACE FS SP
IP CP
Competing against relative market, the IP must have established loyalty from consumers. In order to boost the firm’s CP, there must be computerized record management program to enhance the productivity and to secure the accessibility of the inventory. The SP is stable Competitivsince the firm has the necessary equipment to provide quality service.
BCG
I–E
Hold and Maintain
GRAND Q4 Strong Competitive Position &
Matrix Summary Horizontal Integration Product Development Market Development Market Penetration
QSPM
Hi- 5.75 MD- 3.05 PD-3.05
3 3 2 2
Andoks Litson Manok falls to the second quadrant of the BCG matrix which is the STARS. A high relative market, in which is 51.51 % share and a high industry growth rate of 18 range that enables it to receive substantial investment to maintain its position in the market. Andok’s has a total 2.65 Internal Factor Evaluation Matrix with a total rating of 2.85.
Andok's Litson Manoks falls under quadrant four which have a slow growth in the industry but have a strong competitive position along with other related companies.
The strategies that the company can pursue are market penetration and product development. Market penetration involves to focusing on selling your existing products to increase sales. Product development is focusing on improving the company’s products or services
The HI of QSPM is 5.75 shows a high percentage while MD and PD of QCPM is 3.05 shows an average percentage.
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