Smartmart Strategy Simulation
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1. Set out your overall strategy for SmartMart, explaining why you elected to follow this strategy, and how each decision you made contributed to this strategy.
Overall Strategy: Growth through focus on core competencies and satisfying the needs of each stakeholder by creating shared value
SmartMarts mission, values and historical strategy, directed me to the concept of shared value. My strategy was not forced because the course is on creating shared value but instead because of the companys goal of generating revenues through creating value for every stakeholder. Hence, the overall strategy was focused on reconnecting business success with social and environmental progress (Kramer & Porter, 2011). Throughout the process of the simulation, I focused my strategy on generating long term value for the investors while focusing on the core customers and suppliers.
Scenario 1: Focus on becoming a niche player in the market: In the first scenario, the industry for organic produce was evolving. Bigger players were entering the market and both threatening as well as undercutting SmartMarts products through economies of scale. At this stage, SmartMart could either grow in scale, focus on becoming a niche player or operate as is. Since rivalry proves destructive when it comes to price competition as profits are directed directly from an industry to its customers (Porter, 2008), I selected the niche market route. My decision of pursuing a niche market allows the company to focus on its core competencies of customizing products to the specific market based on the advanced sales tracking system allowing for increase in value for SmartMarts customers. Sourcing from Community Supported Agriculture (CSAs) would benefit not only the community and suppliers but also cater to the trend of increasing demand for locally sourced produce. This scenario also allows for increase in quantity and type of products held in the store, which are of higher margins satisfying the demands of shareholders.
Scenario 2: Acquisition of Bio-fuel producer: Growing SmartMarts product offerings into the bio-fuels market provides the company with an innovative product that is still at its infancy stage. The fact that the bio-fuels industry is still at its infancy stage, allows for less competition within the industry creating great revenue and growth opportunity. My main reason for selecting an acquisition over an alliance was due to the control of the supply chain. SmartMart being a firm, who places immense value on environmental protection, would need to be able to monitor the process of generating bio-fuels if they are to maintain their brand value. Considering that environmentalists and consumers of SmartMart respect the brand, any miscalculated move into this industry would lead to loss of brand perception, which will affect sales of the retail products. It is important to consider societal needs, not just conventional economic needs as social harms can create internal costs for firms (Kramer & Porter, 2011). The main reason for not moving forward with internal growth was due to high costs and low knowledge about the industry.
Scenario 3: Pursue Organics 2.0 by distributing the next generation of high yield high nutrition seeds to growers: Marketing the Organics 2.0 brand by providing farmers with high quality seeds allows for SmartMart to primarily build on their relationships with the suppliers by providing them with high yielding seeds making the farmers more productive. This allows for SmartMart to provide high quality produce to their customers for a lower price as well as improve on their margins. This allows SmartMart to compete indirectly with low cost superstores through differentiation along with improving the value provided to each stakeholder along the value chain.
2. How did you take into account the needs and interests of stakeholders of SmartMart?
Scenario 1: Focus on becoming a niche player in the market: In order to stay competitive in the market, SmartMart would have to differentiate themselves from the other low cost producers. This option worked towards SmartMarts core competencies allowing for high margin customized products benefitting both customers and shareholders focused on long term results, while local sourcing from suppliers using organic farming practices enhanced value to suppliers as well as environmentalists. This option seemed the most lucrative in creating shared value through reconceiving products and markets and through redefining productivity in the value chain (Kramer & Porter, 2011).
Scenario 2: Acquisition of Bio-fuel producer: This decision primarily revolved around four main stakeholders: Investors, Customers, Suppliers and Environmentalists. The dilemma during this decision was on integrating the acquired company into SmartMarts value chain with ease. However the decision to acquire the company was the only decision I considered viable if SmartMart was to gain the confidence of environmentalists, as control of the supply chain would ensure that the bio-fuel produced was of high quality and had low environmental impact. Finally, due to high costs and knowledge barriers associated with internal growth, acquisition seemed the better investment opportunity.
Scenario 3: Pursue Organics 2.0 by distributing the next generation of high