Kudler Fine Food Strategies
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Kudler Fine Foods Strategy
Kudler Fine Foods, under the leadership of founder and CEO Kathy Kudler, is going through many changes in its strategy. Through Porters competitive forces model, Kudler can grasp the need for advancement in technological functions to support whichever business strategy Kudler decides to choose. Although the choosing process is unknown, the apparent choice for Kudler is an innovative strategy. These findings are supported by Kudlers entrance into two new markets, catering and organic produce, and the requests to IT for an interactive website. Kudler will need to implement this strategy fully and must make some decisions in terms of restructuring the company. Lastly, the organization needs to implement processes to monitor the market and realign the strategy with the ever-changing environment.
Porters Model and IT
“Some studies show that more than 90 percent of executives surveyed strongly agree that IT can facilitate a strategic advantage that has a significant impact on profitability and even survival of their organizations” (Turban, Rainer, & Potter, 2003, ch. 13, p. 5). Porters competitive forces model theory is used “to develop strategies for companies to increase their competitive edge” (2003, ch. 13, p.6). An IT system is one of the leading edges that can make or break a company in this new millennium. Porters model is different according to the industry but can be broken down for Kudler into five forces: the threat of new competitors, the bargaining power of suppliers, the bargaining power of customers, the threat of substitute products or services, and the rivalry among existing firms (2003). When using this model on Kudlers technology, the company is not utilizing many new technological advantages as interactive websites and sophisticated databases of gathered information with cross-communication possibilities.
Threat of New Competitors
New gourmet food stores can open at any time. One determent is found in a request for IT. Kudler wants to build a tracking system to install a customer loyalty program that awards points redeemable for gifts, items, products, or services by Kudler or companies that are in partnership with Kudler. Rewards create a reason for customers not to shop at the new store. In addition, all customers need to be informed of the new services of catering and organic produce availability through the website and a flyer specifically aimed at these loyal customers.
Bargaining Power of Suppliers
The Supplier Table contains all the information on the products and services for each supplying company. Maintaining a database of other possible company that can supply the same or equivalent products helps level the bargaining field with suppliers that may want to raise their prices. This is especially important with the addition of the organic produce where quantities can be limited from the usual suppliers in dry seasons and catering where quantities may be larger than one supplier has on hand. Additionally, an unused supplier, organic of otherwise, may list new products for possible resell by Kudler that in bulk may make it more profitable to switch suppliers for the reduced cost and give Kudler the advantage.
Bargaining Power of Customers
Kudler is rolling out new customer focused programs to keep their customers satisfied. Cooking class socials with experts will help Kudler by offering something that the competition does not while increasing the purchases of high margin foods and beverages. Frequent shopper programs and focusing on awareness in high-income zip codes of the offerings of Kudler is the focus of the new sales strategy. Programs need monitoring; therefore, IT needs to develop the system programs for sales and marketing to view progress of the new strategy.
Threat of Substitute Products or Services
Maintaining an accurate and up-to-date list of the inventory, item, and supplier tables helps to prevent the threat of other products that may be substituted and provided better by other stores. The benchmarking and secret shopping of other stores is also a good tool to see what services and products that can deter a customer from shopping at Kudler. Innovative services as gourmet cooking classes are not easily replicated at general supermarkets, but targeting the right clientele needs databases with the right information.
Rivalry among Existing Firms
Other stores can usher a customer quickly through checkout. Although Kudlers system is not slow, customers view time as money and a speedier checkout time can mean the difference in shopping with Kudler or the competition. The suggested monthly newsletter with coupons can be a valuable marketing tool to attract and keep customers. Databases should be set up to monitor the percentage of coupons that are being used to determine if Kudler is connecting to its target customers.
Organic produce will bring a different clientele to the store and may further insure the loyalty of existing clientele. With organic produce now containing preservatives, the shelf life of the produce is shorter; and therefore, smaller amounts of these products should be stocked on the shelves. This means smarter ordering and a quick notice on the depletion of the stock is required. IT can provide this with links from the inventory database to the accounting/purchasing department through inter-related databases.
Determining the Strategy
In the past, Kudler Fine Foods has run on primarily a focus strategy by “selecting a narrow-scope segment” (Turban, Rainer, & Potter, 2003, ch. 13, p. 7) of the food industry. This strategy has served them somewhat well, as they do have a clientele but not enough in that they are still running in the red. Through Porters Model, Kudler can conclude that the time has come to form a new strategy. Kathy has already decided to expand the services provided to her customers by adding organic produce and catering services. Although these services can be seen as a growth, alliance, or customer-oriented strategy, they are primarily an innovation strategy. An innovation strategy develops “new products and services, new features in existing products and services, [or] new ways to produce or sell them” (2003, ch. 13, p. 7).
Hopefully, after performing a SWOT (strength-weakness-opportunity-threat) analysis, the biggest innovation that Kudler will implement to obtain a better strategic advantage opportunity is changes in the strategic information system of IT technology realizing that this is the biggest weakness.