Creating Entrepreneurial Change Elephant House Sri Lanka PDF

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Corporate Digital Communications l 40065085

Table of Contents 1.1 Organization Name and Background .............................................................................................................. 3 1.1.1 Company Background ............................................................................................................................. 3 1.1.2 Size of Organisation................................................................................................................................. 3 1.1.3 Products and Services ............................................................................................................................. 3 1.1.4 Customer Base and Type of organisation ................................................................................................. 3 1.1.5 Competitors ............................................................................................................................................ 4 1.1.4 Stakeholder Summary ............................................................................................................................. 4 1.1.6 Theme Justification: New product/ service development ........................................................................ 4 1.2 Macro Environment Impact on EH: Social and Economic ................................................................................ 5 1.2.1 Socio-cultural Factors .............................................................................................................................. 5 1.2.1a Changes in spending patterns - Disposable Income ............................................................................ 5 1.2.1b Health Conscious and evolving consumer requirements .................................................................... 5 1.2.2 Economic Factors .................................................................................................................................... 6 1.2.2a Economic Growth .............................................................................................................................. 6 1.2.2b Currency Depreciation and Inflation .................................................................................................. 7 1.3 Disruptive innovation and competitor innovation analysis ............................................................................. 8 1.3.1 Disruptive Innovations ............................................................................................................................ 8 1.3.2 Approaches to innovation by competitors ............................................................................................... 8 2.1 Elephant House: innovation Audit ................................................................................................................ 13 2.1.1 Innovation Audit on Organisations Culture, Agility, Skills, Leadership, Resource .................................... 13 2.1.2 EH’s Readiness for Change .................................................................................................................... 13 2.2. Idea generation techniques and Entrepreneurial approaches for Innovation within the organisation .......... 14 2.2.1 Idea Generation Techniques: ................................................................................................................. 14 2.2.1a Horizon Scanning and Mind Maps .................................................................................................... 14 2.2.1 b Risk Radar for Horizon scanning ........................................................................................................ 1 2.2.2 Entrepreneurship approaches for value creation ..................................................................................... 1 3.1 Value Proposition Canvas for Innovations ...................................................................................................... 6 3.1.1 Value Proposition Canvas for Augmented Reality in Frozen Confectionary .............................................. 6 3.1.2 Value Proposition Canvas for Augmented reality in Dairy Free (DF) Health Indulgence ............................ 7 3.2 Innovation measurement techniques for the two innovations........................................................................ 8 3.3 Change management strategy for improving innovation culture. ................................................................. 10 3.3.1 Barriers and Benefits on adopting change management strategy to improve innovation culture ........... 10 iii

Corporate Digital Communications l 40065085 3.3.2 Implementation of Change .................................................................................................................... 11 References......................................................................................................................................................... 12 Appendix ........................................................................................................................................................... 15 Appendix 1: PESTLE Analysis .......................................................................................................................... 15 Appendix 2: Porter’s Five Forces .................................................................................................................... 16 Appendix 3: Competitor Innovations .............................................................................................................. 17 Appendix 4: Competitor Product Reviews ...................................................................................................... 18 Appendix 5: McKenzie’s 7s Framework .......................................................................................................... 19 Appendix 6: Value Chain Analysis for EH ....................................................................................................... 19 Appendix 7: Key stakeholder analysis on implementing an innovation culture. .............................................. 20 Appendix 8: Time framework in adopting Innovation culture change and DF Healthy Indulgence New product innovation ..................................................................................................................................................... 21

List of Figures Figure 1: Key Financial Indicators (Ceylon Cold Stores PLC , 2019) ....................................................................... 3 Figure 2: EH Product range .................................................................................................................................. 3 Figure 3: Overview on product use and key customer segment (Marketing Manager EH, 2020) .......................... 3 Figure 4: Key Competitors of EH (Marketing Manager, 2020) ............................................................................... 4 Figure 5: Stakeholder web for EH (Source: Author) .............................................................................................. 4 Figure 6: Household consumption expenditure percentage growth in Sri Lanka (Ceylon Cold Stores PLC, 2019) .. 5 Figure 7: Consumer spending pattern in Sri Lanka (Tradingeconomics, 2020). ..................................................... 5 Figure 8: New media- Internet and social Media Penetration 2019 (DataReportal, 2019) .................................... 5 Figure 9: Consumer food and health survey (Ceylon Cold Stores PLC, 2019) ........................................................ 5 Figure 10: Projected rates of obesity globally (OECD, 2020). ................................................................................ 6 Figure 11: Sri Lanka - Prevalence of Obesity, Female (% of Female Population Ages 18+) (Tradingeconomics. 2020) ................................................................................................................................................................... 6 Figure 12: Growth rate of GDP in Sri Lanka (Statista, 2020) .................................................................................. 6 Figure 13: Industrial and Manufacturing Sector GDP impact due to April terror attack. (Ceylon Cold Stores PLC, 2019) ................................................................................................................................................................... 6 Figure 14:Sri Lanka Exchange Rate against USD 2015-2020 (Ceic (CeicData, Data, 202 2020 0). ....................................................... 7

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Corporate Digital Communications l 40065085 Figure 15: Sri Lanka Inflation Rate 1984 -2024 (Statista, 2020) ............................................................................. 7 Figure 16:Distruptive Innovations (Trott, 2011) ................................................................................................... 8 Figure 17: Innovation Matrix (Henderson and Clark, 1990) ................................................................................. 8 Figure 18: Horizon Scanning Model (Sharpe, 2013) ............................................................................................ 14 Figure 19: Food Industry 3D printing: a) Hershey 3D chocolate, b) Oreo 3D cream patterns (Blacksmith Applications, 2018) ........................................................................................................................................... 14 Figure 20: AR Innovations in (a) Coca Cola, (b) Haagen-Daas and (c) Magnum .................................................... 14 Figure 21: Mind Map for New product Development ........................................................................................... 1 Figure 22: Risk Radar for EH (Source: Author) ...................................................................................................... 1 Figure 23: Effectuation Principles (Sarasvathy, 2001) ........................................................................................... 1 Figure 24: Stage Gate Innovation Process (Cooper, 1994) .................................................................................... 2 Figure 25: Value Proposition Canvas for Augmented Reality ................................................................................ 6 Figure 26: Value Proposition Canvas for Dairy Free (DF) Healthy Delight FC......................................................... 7

List of Tables Table 1: Product and target customers ................................................................................................................ 3 Table 2: EH product comparison with competitor Disruptive innovation 1 ......................................................... 9 Table 3: EH product comparison with competitor Disruptive innovation 2 ........................................................ 10 Table 4: Innovation Audit on Organisations Culture, Agility, Skills, Leadership, Resource and Innovation Rating 13 Table 5: Horizon Scanning for EH ....................................................................................................................... 14 Table 6: Effectuation Approach ............................................................................................................................ 1 Table 7: Stage Gate Innovation process Approach ............................................................................................... 2 Table 8 Lean thinking Approach ........................................................................................................................... 3 Table 9: Balance Score card for innovation measurement (Source: Author) ......................................................... 8 Table 10: Innovation Risk Analysis Scorecard (Source: Author) ............................................................................. 9 Table 11: EH's Change management strategy using Kotter's 8 step model adopted from Kotter, (1996) ............ 10 Table 12: Barriers and Benefits on adopting change management strategy to improve innovation culture ........ 11

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Task 1: Disruptive Strategies Task 1.2 to Task 1.3-word count: 1263

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BRIEF REPEORT To: Senior Management Team By: Ashcharya De Silva Date: 28th May 2020

This section of the report gives an introduction to Elephant House including its range of products & services, size, competitors, and key stakeholders. Economic and social factors that have influenced the company performance have been discussed and finally a risk and future impact analysis on how innovation has impacted the ice cream market sector has been provided.

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Corporate Digital Communications l 40065085 1.1 Organization Name and Background 1.1.1 Company Background Ceylon Cold Stores PLC (CCS) that trades under the name Elephant House (EH), operates in the Food and Beverage industry and is the market leader in Sri Lanka for manufacturing frozen confectionary. EH was founded in 1866 by Von Possner which was then known as ‘The Ceylon Ice Company’. In 1970, The company was then listed in the Ceylon Stock Exchange. Elephant House, also exports its products to over 25 countries.

Synonymous wi th with Wholesome Goodness

1.1.2 Size of Organisation

154

Colombo

45

Years Young

HQ

Flavours of Ice Cream

LKR 13.52 Bn 1,111 Turnover Total Employees

LKR 1.096 Bn Net Profit after Tax

LKR 19.727 Bn Total assets Figure 1: Key Financial Indicators (Ceylon Cold Stores PLC , 2019)

1.1.3 Products and Services EH is the market leader in Sri Lanka’s frozen confectionery markets, that offer exciting range of products to different customers Table 1: Product and target customers

Figure 2: EH Product range

EH Product Imorich premium Ice Cream Sugar free Lite Icecream Justice League Ice cream partnered with Warner Bros

Category Impulse/ bulk Bulk Impulse

Target Customers Upper & Upper middle-class Adults looking for premium taste. Large growing segment of Health-conscious adults/ diabetic consumers Delight for the kids as well as the movie geeks.

1.1.4 Customer Base and Type of organisation Elephant House (EH) is a B2C company consisting a customer base with ages ranging from 3 years to 60 years. The key customer segment is not focused mainly based on age demographics but primarily on customer’s tastes and mind sets. EH comprises of products to fulfil these requirements based on all age groups as illustrated in Figure 3 Figure 3: Overview on product use and key customer segment (Marketing Manager EH, 2020)

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Corporate Digital Communications l 40065085 1.1.5 Competitors EH being the market leader in Sri Lanka closely competes aggressively with its key competitor Cargills Magic which had grown over the last few years. Other Key competitors in the market includes Highland and Pelwatte (Ceylon Cold Stores PLC, 2019) 1.1.4 Stakeholder Summary Value created to Key Stakeholders: 2018/19

Employees

Shareholders

Rs.47mn Investment i training, diverse work force with 43% wome representation.

Investments in manufacturing including in energy efficient technology and responsible waste disposable systems

Communities Rs.26mn Investment in community engagemen through CSR projects

Figure 4: Key Competitors of EH (Marketing Manager, 2020)

Government Employment generation. Compliance with relevant regulations and guidelines

Customers/ Suppliers Launch of 08 new ice cream Flavours in 2019. Reformulations to drive sugar reduction for healthconscious consumers. Downward price revisions

Figure 5: Stakeholder web for EH (Source: Author)

1.1.6 Theme Justification: New product/ service development EH operates in a dynamic market where demand for products is constantly shifting with the changing consumer wants and needs as well as technology changes. Consumer trends in the food and beverage industry over the years have been observed shifting towards products with clean label and high ethical values, Dairy-free, plant based food and health and wellness consumer behaviour (Forbes, 2019). EH’s revenue has shown an insignificant growth of just 1.3% from 2018 to 2019 (Ceylon Cold Stores PLC, 2019). Therefore, in order to increase sales and capture market share to remain the market leader in the frozen confectionary segment in the competitive environment, EH should keep up to the evolving customer trends by innovating and introducing new products and services to keep up with changes to remain the market leader in Sri Lanka and increase growth in the export segment to compete globally.

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Corporate Digital Communications l 40065085 1.2 Macro Environment Impact on EH: Social and Economic 1.2.1 Socio-cultural Factors 1.2.1a Changes in spending patterns - Disposable Income Consumer Spending in Sri Lanka increased to LKR 10,081,223 mn in 2018 from LKR 8,262,817 mn in 2017 (Tradingeconomics, 2020). Performance of the fast-moving consumer goods (FMCG) segment is directly linked to household consumption patterns. During the year 2019, Sri Lanka’s household consumption expenditure was subdued, growing marginally by 2.3% due to weak consumer confidence, higher interest rates for most part of the year and depreciation of the exchange rate (Ceylon Cold Stores PLC, 2019). Over the longer- term however, a growing urban middle class, rising disposable incomes and increasing customer sophistication is expected to drive household consumption expenditure.

Figure 6: Household consumption expenditure percentage Figure 7: Consumer spending pattern in Sri Lanka growth in Sri Lanka (Ceylon Cold Stores PLC, 2019) (Tradingeconomics, 2020).

1.2.1b Health Conscious and evolving consumer requirements Consumers are becoming more health conscious. Increasingly, products that are labeled “healthy” are being marketed and media (traditional and new media) has played a crucial role in highlighting obesity (Figure 8) and its ill effects on both shortterm and long-term enjoyment of life (Figure 10 and Figure 11). Along with Health consciousness, Nutrition and wellness are emerging as a key priority, Consumers, mainly millennials are increasingly seeking products with meaningful functional benefits including energy and stress relief which can support healthy lifestyles.

6.7M+ Active Internet Users 34% of total population

6.2M+ Social Media Users 30% of total population

Figure 8: New media- Internet and social Media Penetration 2019 (DataReportal, 2019)

Figure 9: Consumer food and health survey (Ceylon Cold Stores PLC, 2019)

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Figure 10: Projected rates of obesity globally (OECD, 2020).

Figure 11: Sri Lanka - Prevalence of Obesity, Female (% of Female Population Ages 18+) (Tradingeconomics. 2020)

1.2.2 Economic Factors 1.2.2a Economic Growth Sri Lanka is a middle-income country with a GDP per capita of USD 4,102 (2018) and a total population of 21.7 million people. With 38% of the employed population (World Bank, 2020). Following 30 years of civil war that ended in 2009, Sri Lanka’s economy grew at an average 5.6% during the period of 2010-2018. However, Sri Lanka’s GDP growth moderated to 3.21% in 2018 (from 3.42% in 2017) reflecting cascading effects of global dynamics. GDP growth of Industrial sector was disappointing at 0.9% in 2018 due political controversy (World Bank. 2020). Moreover, in 2019, the unforeseen Easter Sunday terror attack in April, negatively impacted the country’s GDP (Figure 13) (Daily FT, 2019). Figure 12: Growth rate of GDP in Sri Lanka (Statista, 2020) Furthermore, Sri Lanka’s economy is challenged this year as it fights the spread of the global virus...