Strategic Management Principles and Practices AQF Level 7

Shelly Ann Labbay

A001427954

Strategic Management of Gourmet Breads Online

Word count: (from the start of the Introduction section to the end of the
Conclusion section) 2409

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Assignment Topic

Organisations can have a number of strategic options available to them.

Making the right choice from available strategic options is the result of in-
depth internal and external environmental analysis and better alignment
with their vision, mission, and statement of values and objectives.

Select an organisation of your own choice and, without going into the
details, provide their vision, mission and statement of values and briefly
discuss the objectives. For this assignment you may use the existing
statements and objectives.

Using appropriate Strategic Management tools, critically analyse the

internal and external environment of the chosen organisation. Based on
your analyses, identify and critically evaluate two strategic options and
select one option that provides the best strategic fit for the chosen
organisation. With the help of sound arguments, justify why you think this
is the best strategic option and how this can help the chosen organisation
to achieve their overall vision and mission and strengthen their position in
the market.

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Executive summary

This assignment seeks to critically analyse the strategic management of

Gourmet Beads online and highlight the key aspects, particularly as it
relates to using different strategic management tools and the
implementation of strategies. It will analyse the macro-environment, and
compare and select a strategy and analyse the reason for the choice.
Lastly, the assignment will indicate what position the company should
maintain as its strategic position.

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 Table of contents

1. Introduction.................................................................................................. 5
2. Value Statements......................................................................................... 6
2.1 Vision Statement....................................................................................6
2.2 Mission Statement................................................................................ 6
2.3 Statement of Values..............................................................................6
2.4 Objectives.............................................................................................. 6
3. The Analyses................................................................................................ 6
3.1 PESTEL Framework.................................................................................6
3.2 Porters Five Forces Framework...............................................................8
3.3 Value Chain............................................................................................ 9
3.4 VRIO Framework..................................................................................11
4. TOWS Matrix................................................................................................. 11
5. Strategic Options........................................................................................ 12
5.1 Differentiation Focus............................................................................ 12
5.2 Differentiation...................................................................................... 13
6. Conclusion.................................................................................................... 13
7. Reference list................................................................................................ 15
References..................................................................................................... 15
Appendix 1 [ Title of Appendix 1]............................................................16
Appendix 2 [ Title of Appendix 2 ]...........................................................17

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 1. Introduction

Strategy is a major part of our daily lives. Whether we realize it or not, we

strategize daily without even recognizing it. This principle of strategizing
though important in daily living, is of paramount importance in the
business world. Family businesses have a particularly difficult struggle in
also having to manage a business whilst remaining a happy, functional
family unit. (Nancy J, 2000) Management strategies, or deliberate efforts
to resolve unmet needs, often require consensus of the family members
as to the preferred adaptive behaviour.

Gourmet breads online is an online only bakery located in Trinidad

founded by the Albert family. They are a family of five, the two parents
and their three adult children. The company does not currently have a
shopfront and are strictly online only. The baking is done in an attached
part of their home created solely for this purpose. There are currently
several different options available from breads which include but are not
limited to pumpernickel, honey, raisin, pumpkin, garlic and Italian. At
customer request, specialty combinations can be made using local fruits
and vegetables. During Christmas time a local flower called Sorrel is
typically used as it is seasonal to make a drink. This sorrel is often made
into a bread which customers seem to enjoy immensely.

Presently, they have an online system that allows customers to go online

or call via telephone and place orders for their specialty breads.

Their breads are made to customer specifications and they have a variety
of options available. However, most of their breads are made to cater for
the gluten free community. Currently the children are primarily responsible
for the deliveries with the three vehicles that were purchased for this
cause.

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They currently only do deliveries within the west of Trinidad which
encompasses, the Diego Martin/Petit Valley area and the Carenage/ West
Moorings and Chaguaramas area.

They operate daily during the hours of 6am to 10pm. The company was
borne from a desire to increase awareness of healthier breakfast choices,
not just for a profit. It began in their own neighbourhood when friends
expressed their frustration in gluten free options available. Having a
background in Food and Nutrition and years of experience baking for her
family, Gourmet breads online was came to fruition.

They do not sell to supermarkets at present and their products are

available strictly by the online ordering process or telephone ordering and
their delivery only. This is because they maintain that their customers
image of their product should always be that they have the freshest
breads they have ever tasted; hence, they have opted not to have their
products stocked on shelves where they may be bought stale or have
wastage because of unsold products. Freshly baked breads daily, with
flavour combinations as far as your imagination can take you, thats what
you can expect when you order your breads from Gourmet breads online.
This is the position they have chosen to maintain and its a strategy that
seems to be working for their SBU.

There are several different ways of looking at strategy. Exploring Strategy

has noted a few. Aside from there definition, those of Michel Porter and
Alfred Chandler.

(Gerry Johnson, 2014) the determination of the long-run goals and

objectives of an enterprise and the adoption of courses of action and the
allocation of resource necessary for carrying out these goals Alfred
Chandler

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Porter stated Competitive strategy is about being different. It means
deliberately choosing a different set of activities to deliver a unique mix of
value.

(Gerry Johnson, 2014) Strategy is the long-term goals of an organisation.

2. Value Statements

2.1 Vision Statement

To have our gourmet breads in every home nationwide. To become the

brand that embodies the products we sell. To have our customer awed at
our inimitable product, taste, quality and customer service.

2.2 Mission Statement

To be the number one choice of fresh, gourmet, home delivered breads.

2.3 Statement of Values

Superb customer service unmatched by others.

To provide customers with a service that exceeds their expectations.
To be quick, consistent and committed.
To be the epitome of a hospitality professional.
To always act with honesty and integrity.
To have the business bring our family closer as it flourishes.

2.4 Objectives

To cover initial start-up costs with 10% profit at the end of year one.
To consistently increase year end profits by 10% each year.
To create an app to enhance the ordering process in 2 years.
To deliver to our product throughout the island in 4 years.
To have a delivery service in Tobago in 5 years.

3. The Analyses

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3.1 PESTEL Framework

Types of Environmental Factors Issues faced

Trinidad and Tobago is part of
groups such as CARICOM and
CARIFTA that deal with trading
amongst member states, however,
the small size of the company
presently makes trading on an

Political international level impossible. The

current issues faced are the be
changes in political parties. With
each change things like the cost of
raw materials and the Vat
associated with it increases which
poses the most threat. Recession is
also a real threat.
Gourmet breads online has decided
to keep the company within the
family and depend solely on the
profits and the investments of the
family to survive as opposed to

Economic adding shareholders. Therefore,

the rate of inflation 3.1% (Office,
2016)as of September 2016,
recessions and the high
unemployment rate of 4.4%
(Office, 2016) are what poses the
biggest issues.
Social The social trends such as the
increasing health conscious
population is what has allowed
Gourmet breads online to flourish.

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 This need for healthier and better
quality breads is what has led to
the inception of the organisation.
Social media also is a great
marketing tool since it provides
free advertisements. Customers
can post images tagging the
company and friends creating a
network of followers and thusly
increasing the awareness of the
company.
Technological advancements can
greatly improve the baking
conditions. With the inventions of
floor standing mixers and other
tools that prevent overmixing,
technology can be a bakers dream.

Technological Additionally, since there is

basically an android or apple app
for everything, moving to creating
an app would allow for a much
easier ordering process in the
future. Technology can also have a
negative effect if everyone decides
they can D.I.Y.
Environmental Trinidad and Tobago currently has
very lax laws with regards to
ecology. Therefore, Gourmet
breads online has taken it upon
themselves to use small
environmentally/ecologically
friendly methods such as recycling
and proper waste disposal and
paying close attention to their

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 electricity consumption.
Legal Trinidad and Tobago has numerous
laws with regard to sexual
harassment, labour and trade
unions. The only law that applies to
such a small company that is
family owned is the Health and
safety laws and first aid which
followed religiously.

3.2 VRIO Framework

This framework highlights the key criteria on which Gourmet Breads online
competitive advantages can be judged:

Competitive Value Rare Inimita Organisa Competitive

Advantage ble tion implications
Supporte
d

Superior Parity
YES NO NO YES
product quality

Customer- Sustained competitive

Tailored YES YES NO YES advantage
products

New innovative Temporary competitive

YES NO NO YES
service advantage

Healthy impact Parity

YES YES NO YES
society

3.3 Porters Five Forces Framework

Types of competitive Forces Level of Forces

Threat of entry There is a very high threat of entry

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 due to low barriers of entry in the
baking industry.
This is high because customers

Threat of substitutes dont need to purchase breads.

They can have crackers or any
other myriad of things.
This is low due to the lack of

Power of buyers specialised services providing

gourmet and healthy options that
are delivered to their door.
Power of suppliers The power of suppliers is low
because there are so many other
suppliers that can be used.
Industry rivalry Because Gourmet breads online is
one of a kind the direct rivalry is
low. Currently there are no other
companies that make and deliver
gourmet breads to customers.

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3.4 Value Chain

Primary activities concerned with Gourmet Breads online are as follows:

Inbound logistics:
Approved suppliers
Inspect and uphold highest safety standards
Obtain locally produced raw materials and packaging for
products
Operations:
Manufacture products locally (Baking)
Maintain Machinery
Quality Control
Outbound logistics:
Inventory control and storage before distribution
Delivering products to customers
Marketing and sales:
Social Media Advertising
Flyers in neighbourhood mailboxes
Posters at major businesses in the target neighbourhood e.g.
supermarkets, malls and pharmacys etc.
Referrals
Cold Calling

Service:
After sales service follow up calls
Order processing
Quality Customer service
Online forms
Home delivery

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 Nutritional value creating value for society at large through
nutrition

The support activities that aid in the efficiency and effectiveness of the
prime activities are:

Procurement:
Procurement of their raw materials, machines and supplies,
ensuring they maintain high product quality.
Technology development:
Processing enhancement computerized and automated sales
system that providing data on stock levels; location; order
placement; sales and salaries.
Human resource management:
Staff of family members that place a significant value of the
quality of work produced and improving the health of the
population. They are constantly advancing themselves
through external training in their relevant areas. e.g. Health
and safety, customer care and defensive driving.
Firm Infrastructure:
Family business and equal partnership.

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4. TOWS Matrix
Threats (external)
Threat of Imitation because
its a service and cannot be
patented
Economic Downturn
Threat of substitution
Recession
Weakness (internal)
New company and unfamiliar
Potentially high bills
No shopfront for walk ins
5. Strategic Options
There are different options for Gourmet breads online to take in terms of
strategy. However, based on the information one can assume that they
will pursue a strategy that is differentiated as opposed to a Cost Focussed
strategy.
Opportunities (external)
Opportunity to increase
profits and target market as
health based products
increase in demand
Move into other territories
Storefront
Adding to product range
Creating an app for cell
phones to make ordering
easier
Chance to make more
positive contributions to
societal health
Strengths (internal)
Personalized service
New, unique and healthy
options
Convenient delivery to
homes
Excellent customer service
Fast delivery
Family owned and run
No shopfront to pay for
First service of its kind
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5.1 Differentiation Focus
(Gerry Johnson, 2014) Differentiation focusers look for specific needs
that broader differentiators do not serve so well. Focus on one particular
need helps to build specialist knowledge and technology, increases
commitment to service and can improve brand recognition and customer
loyalty.

Gourmet breads online can use differentiation focus as a strategy because

it is in alignment with the findings of the analysis done. With gourmet
breads online providing a service that is as unique as it is differentiation
focus is a viable option. Based on the findings there are two possible
competitors. (Anon., n.d.)For breads the Kiss baking company, an SBU of
the Bermudez baking company, a leader in breads and cakes and other
snacks in Trinidad and Tobago and regionally. The Kiss baking company
provides several options for breads, however, they are not healthy. Their
healthy options are wheat and oats. For persons with Celiac disease or any
other gluten allergy or restrictions, this is simply not an option. The other
competitor is Moys Gluten free kitchen, who provides gluten free options
but do not deliver or open at late hours. They are not a direct competitor
for Gourmet foods online because the target market and demographics
are completely different. Gourmet breads online saw this niche market
and aggressively targeted it. With their offerings of gluten free bread
options which are also conveniently delivered to their door and the
convenient hours of operation, they have made major headway in this
regard, making them an ideal candidate for differentiation focus.

5.2 Differentiation
(Gerry Johnson, 2014) Differentiation involves uniqueness along some
dimension that is sufficiently valued by customers to allow a price
premium.

It is apparent based on the findings that this is another probable option.

Since Gourmet breads online is a small startup company, it cannot
possibly compete in the same categories such as kiss. The size of the
company, the amount of distribution channels or the price they would

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charge. Thusly, using differentiation strategy would not only allow breads
to compete in a category all its own but provide them with the option to
have a higher price point for their service thereby making it easier for
them to achieve their overall goal of covering their initial investment
startup cost and profit within their first year.

6. Conclusion

(Krishnan, 2011)Emerging market economies have high growth potential

but are characterized by high environmental turbulence (Luo and Peng,
1999), underdeveloped institutional framework (Peng et al., 2008) and a
large market at the middle and bottom of the income pyramid that is
upwardly mobile (Prahalad and Lieberthal, 1998)

In businesses, particularly small businesses there is a great level of

potential, but also a great level of external factors that can counteract the
potential success. Based on the findings and analyses, I would
recommend that Gourmet breads online compete in differentiation focus
category.
Whilst either strategy would be a good fit for them, they should not limit
themselves to marketing simply gluten free options. They are already in a
smaller market because they are currently only supplying to a small area
at present, and whilst the area is vast, marketing to an even smaller
demographic may prove unprofitable. Additionally, I would recommend
that they invest some of their profits into some R&D. Nothing was
mentioned about R&D and if they are to successfully compete using a
Differentiation strategy, some attention must be paid to this area.

Ultimately, I see many years of success for the Albert family, though
theres still work to be done, unbeknownst to them, they have employed
winning strategies without knowing it. They have a great product and
strong family unit and applying the four Cs as they have done brings
success closer to them. (MILLER, I 2015)Our studies of enduring family-

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run organizations found that the best performers pursued what we call
the 4Cs:
CONTINUITY. Pursuing a lasting mission of substance, not a dollar-driven
strategy. COMMUNITY. Nurturing a caring collective, not a tournament
atmosphere.
CONNECTION. Securing generous relations with outsiders instead of one-
shot bargains. COMMAND. Acting as an unfettered steward rather than a
servant to short-sighted shareholders.

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7. Reference list

References
Gerry Johnson, R. W. K. S. D. A. P. R., 2014. Exploring Stratagy. s.l.:Pearson
Education Limited.

Gerry Johnson, R. W. K. S. D. A. P. R., 2014. Exploring Strategy. In:

Exploring Strategy. s.l.:Pearson Education Limited, p. 194.

Krishnan, R. &. J., 2011. Innovation strategies in emerging markets: what

can we learn from Indian market leaders. ASCI Journal of Management,
vol. 41, no. 1, pp. 21-45.

MILLER, D. &. L. B.-M., I 2015. What Every Small Business Can Learn From
Great Family Firms. IESE Insight, no. 25, pp. 33-40.

Nancy J, M., 2000. Family Microenterprises: Strategies for Coping with

Overlapping Family and Business Demands. Journal of Developmental
Entrepreneurship vol. 5, no. 2, p. 87.

Office, C. S., 2016. Central Statistical Office of Trinidad and Tobago.

[Online]
Available at: http://cso.gov.tt/

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Appendix 1 flyer

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