Strategic Management Simulation PDF

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Summary

Third Year - MYLMS Business Management 3A - Segmentation, Targeting, Positioning Simulation...

Description

Date: 4 May 2021

SIMULATION TITLE: Strategic Management

SIMULATION DESCRIPTION: Holden Evan's Country Comfort Coffee has been an industry leader for decades. Country Comfort is considered a very high quality “standard” style coffee sold predominantly in grocery stores rather than specialty coffee shops. It does not directly compete with the super-premium, super expensive “coffee-shop” style coffees (e.g., Starbucks) that have become popular in recent years and are also available in stores for purchase.

Country Comfort now needs to do some strategic planning with respect to the future. Your goal, as a member of Country Comfort's Strategic Management team, is to provide input that will help your boss (1) assess the Country Comfort brand as it currently is configured, and (2) make decisions about future strategies and actions.

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Background

Holden Evan's Country Comfort Coffee has been an industry leader for decades. Country Comfort is considered a very high quality “standard” style coffee that does not directly compete with the super-premium, super expensive “coffee-shop” style coffees (e.g., Starbucks) that have become popular in recent years and are also available in stores for purchase.

Country Comfort now needs to do some strategic planning with respect to the future. Your goal, as a member of Country Comfort's Strategic Management team, is to provide input that will help your boss (1) assess the Country Comfort brand as it currently is configured, and (2) make decisions about future strategies and actions.

Background

Country Comfort so far has withstood the advent of the super-premiums well, choosing to hold its ground and focus on its solid, “middle-brow” core market and core image of being "simple, unpretentious, and excellent.”

Key threats to the brand are emerging and include many well-financed and well-known competitors in the grocery store market, including the super-premium coffees that are often linked to popular coffee shop franchises, and the possible stodginess of the Country Comfort brand.

Key opportunities for Country Comfort include pod-style coffee, something that is intriguing to Country Comfort because of its high profit margin. Pod coffee comes as a single-serving, pre-measured capsule that can be made (in a special pod-style machine like a Keurig) and disposed of easily. Country Comfort sees this high profit as a promising opportunity.

Background

Your advisor on this project is Jessica Smartt, a product manager who has worked for Holden Evan for ten years. She is an expert on the Country Comfort brand, and will help you when you need advice.

Jessica: “I look forward to working with you on the strategic management team. I hope that I can offer useful advice regarding both strategic management and Country Comfort Coffee.”

Mission

Country Comfort Coffee's strategic management team is reviewing the company's mission statement—to sell the world's best-tasting coffee at any price—to determine whether their new idea to produce pod coffee matches with the company's core values. Does the pod coffee idea fit with Holden Evan's mission statement?

YOU CHOSE OPTION 1 Yes—you think pod coffee fits well with the company's mission statement.

When asked if the pod coffee idea fits with Holden Evan's mission statement, you chose “Yes —you think pod coffee fits well with the company's mission statement.”

Good choice! Holden Evan's mission is to “sell the world's best-tasting coffee at any price.” This encompasses all forms of coffee, including the pod coffee concept. As long as the pod coffee is equal in quality and taste as the other forms of coffee, then the concept is in line with the mission statement.

Analyze or Formulate a Strategy?

The strategic management team has agreed that the pod coffee idea works well with the company's mission statement and decides that the company should move forward in exploring the pod coffee idea.

In order to make sure that the pod coffee idea is a good one, and to see if there are other potential future endeavors to pursue, you must analyze the market situation and formulate a strategy.

Your boss asks you to start working on the pod coffee idea. What is your first step?

YOU CHOSE OPTION 1 Your first step is to analyze the organization's strengths, weaknesses, opportunities, and threats.

When asked what your first step should be in working on the pod coffee concept, you answered “Your first step is to analyze the organization's strengths, weaknesses, opportunities, and threats.”

Good choice! This SWOT analysis must be performed before you can formulate any type of strategy for a new product. It helps you identify the strong and weak areas of your organization as well as what opportunities and threats are surrounding your new product idea.

External Analysis: Threats

In your research on external threats, you read a report that the sales of one of your competitors, Erudite Beans, has been on the rise. In addition, Erudite Beans has also indicated in their PR releases that they are planning to move into the pod coffee market.

Based on this information, some team members believe that Erudite Beans is likely to be the primary external threat to Holden Evan's new venture. Which of the following, if true, would be the strongest evidence supporting that position?

YOU CHOSE OPTION 1 An industry insider has already published a glowing review of a pod coffee prototype from Erudite Beans in a local trade publication.

When asked which of the options would strengthen the position that Erudite Beans is likely to be the primary external threat to Holden Evan's new venture, you selected “An industry insider has already published a glowing review of a pod coffee prototype from Erudite Beans in a local trade publication.”

Very perceptive of you! Because your competitor, Erudite Beans, already has a pod coffee prototype, it is the primary external threat to Holden Evan.

External Analysis: Opportunities

You share with Jessica your thoughts on what some of the external threats are for the company and express concern that perhaps you shouldn't seek out new

products/opportunities at this juncture. Your advisor reminds you that you also need to consider what external opportunities exist that would aid in moving forward with this new venture.

Which of the following, if true, suggests an opportunity for Country Comfort?

YOU CHOSE OPTION 1 According to the review of Erudite Beans' pod coffee, the company is charging more for its new pod product. Customers are not happy about the higher cost and are beginning to hesitate at the price.

When asked which option suggests an opportunity for Country Comfort, you chose “According to the review of Erudite Beans' pod coffee, the company is charging more for its new pod product. Customers are not happy about the higher price and are beginning to balk at the cost.”

Excellent choice! You rightly determined that the high cost of your competitors can be turned into an opportunity for Holden Evan's new venture. By offering a lower-cost alternative, Country Comfort can fill a perceived need of consumers.

Internal Analysis: Strengths

The strategic management team thinks entering the pod coffee market is the best choice for the company, but asks you to think about the company's internal strengths and weaknesses before they make a final decision.

First you decide to look at the company's strengths. Which two of the following four options suggests that Holden Evan has an advantage in this market?

When asked which of the options would suggest that Holden Evan has an advantage in the pod coffee market, you selected “Country Comfort's ground coffee won the “Coffee of the Year” award from Consumer Reports magazine last year,” and “Because Holden Evan is a

large company, it can utilize economies of scale. Because of this, a new product such as pod coffee could compete on price.”

Excellent! You have chosen the two strongest options pinpointing Holden Evan's advantages. Country Comfort's excellence in the ground coffee market is a good selling point that might increase the likelihood of commercial success of a new pod coffee product. And Holden Evan's economies of scale can only help in the venture into the pod coffee market. If they can produce a good, quality product for a lower cost, that's a great strength.

Holden Evan’s standing in other product lines is irrelevant to determining the company’s strengths and weaknesses as it relates to the coffee business. Market share gained in 1986 is also not the organization’s most advantageous strength. Information from 1986 is irrelevant—historical information such as how the company acquired its market share plays no part in the SWOT analysis that you are currently developing for the pod coffee concept.

External Analysis: Opportunities

Now that you have looked at the company's internal strengths, you turn your attention to its weaknesses. Which of the following, if true, would suggest that Holden Evan is not well positioned to enter the pod coffee market?

YOU CHOSE OPTION 2 Country Comfort has been known for decades as the coffee for conservative, “middle-brow” drinkers, who are less likely to be interested in new products.

Next you were asked to choose which option would suggest that Holden Evan is not well positioned to enter the pod coffee market. You chose “Country Comfort has been known for decades as the coffee for conservative, 'middle-brow' drinkers, who do not want to try new things.”

Good choice. Country Comfort's current customer base is more conservative and less likely to try new things such as the pod coffee concept, which means your new venture might fail with current customers.

Info Screen

You have finished your analysis of the current situation for Country Comfort. You must now consider what kind of strategy you would recommend and develop for Holden Evan going forward.

Choosing a Strategy

Jessica tells you, “Now that you have made your analysis of the current situation for Country Comfort, think about a strategy going forward.”

From what you've determined about Country Comfort's competitive strategy, what would be your recommendations in the ongoing discussion of Holden Evan's corporate strategy for the future? Should it change, and if so, how? Keep in mind that corporate strategy is an overall strategy—do you want your company to grow? Stabilize? Renew? Competitive strategies concentrate on how you go about establishing competitive advantage. To be successful, a company needs both an effective corporate strategy and an effective competitive strategy.

Choose a Corporate Strategy Goal

Which of the corporate strategy goals should you pursue for Holden Evan?

YOU CHOSE OPTION 1 A corporate strategy that focuses on growth by developing new products or seeking out new markets for Holden Evan's existing products.

You decided to pursue a corporate strategy that focuses on growth.

Good choice. Country Comfort is developing a new pod coffee product, which dovetails nicely into a growth strategy. Seeking out new markets will further grow Holden Evan's total holdings. You might have chosen a stability strategy instead, but your choice was reasonable.

Corporate Strategy: Growth

Which corporate growth strategy will work best for Country Comfort in its pod coffee endeavor?

YOU CHOSE OPTION 1 A concentration strategy that focuses on increasing the number of products offered or markets served in this primary business.

When asked which corporate growth strategy would work best for Country Comfort in its pod coffee endeavor, you selected a concentration strategy that focuses on increasing the number of products offered or markets served in this primary business.

Good job. A concentration strategy for growth would be an appropriate pick for a new product offering such as the pod coffee concept because Holden Evan wants to expand its coffee offerings. With this strategy, you can concentrate your efforts on product diversification.

Which Competitive Strategy?

Which competitive strategy will you choose for Country Comfort? (Either choice is acceptable.)

YOU CHOSE OPTION 1 A competitive strategy that focuses on core competencies—the activities that can deliver competitive advantage in the short term and into the future, thus allowing Country Comfort to do something better than its competitors.

You decided to pursue a competitive strategy that focuses on core competencies.

This was a good choice because you can emphasize the past success of Country Comfort. The brand has long been an industry leader and remains a popular product that should remain a viable high-quality alternative to the super-premium products such as Starbucks.

Competitive Strategy: Core Competency

Which competitive strategy best utilizes Country Comfort's core competencies (which include a large and efficient network of obtaining and processing quality coffee beans)?

YOU CHOSE OPTION 1 Use Country Comfort's core competencies to pursue a cost leadership strategy in which Country Comfort can deliver better quality at a lower price than competitors.

When asked which competitive strategy best utilizes Country Comfort's core competencies, you chose to pursue a cost leadership strategy in which Country Comfort can deliver better quality at a lower price than competitors.

This the optimal decision. Using the company’s core competencies to pursue a cost leadership strategy allows Country Comfort to deliver a better quality at a lower price; a winwin solution....