North South University

MBA Program
School of Business & Economics

Assignment on ‘Strategic Planning for Star Food and Beverage Ltd. (SF&B)’

Course Title: Strategic Planning

Course Code: MGT670; Section: 1
Semester: Spring 2020

Submitted to
Dr. Md. Tabarak Hussain Bhuiyan, IM& A
Managing director & CEO, Prime Bank Investment L.T.D/ ADDL, MD, Prime Bank LTD
Articling Lawyer and Member, Ontario law society and Canadian Bar Association

Submitted by

Shovan Chowdhury
Student ID: 1815218060

Submission Date: 2nd June, 2020

 Letter of Transmittal

June 2, 2020
Dr. Md. Tabarak Hussain Bhuiyan, IM& A
Managing director & CEO, Prime Bank Investment L.T.D/ ADDL, MD, Prime Bank LTD
Articling Lawyer and Member, Ontario law society and Canadian Bar Association

Subject: Strategic planning of Star Food & Beverage Ltd.

Dear Sir,
With great respect, I want to inform you that I feel happy to submit my assignment on
strategic planning of Star Food & Beverage Ltd. I am feeling proud as I have completed my
assignment with your energetic guidance and direction.

I have tried my best to cover up all the elements of strategic plan that you have taught me
in the class.

Your suggestion and guidance helped me a lot to complete the assignment in due time.
I hope that this assignment will thoroughly reflect the learnings I have garnered from you.

Sincerely yours,
Shovan Chowdhury
Student ID: 1815218060
 Acknowledgement

At first take my heartiest gratitude to the respected teacher of the course Dr. Md. Tabarak
Hossain Bhuiyan, whose enthusiastic inspiration and tremendous support helped me all
the way through to complete this assignment. It is my utmost pleasure to acknowledge him
warmly. I was also very glad to have him as an instructor of my ‘Strategic Planning’ course.
His class lectures and study materials were updated and richly designed to make studying
fun. I also honestly thank to the google website which also helped me a lot by providing
detailed information throughout the making of my assignment.
 Executive Summary

As a student of business administration, investigating today's business world is very critical

to observe the present socio- economic scenario. In this report, I tried to present my
knowledge concerning strategic plan. The topic of my assignment is to make a strategic
plan of Star Food and Beverage Ltd. (SF&B). The mission I selected for SF&B is to be the
‘first-rate’ manufacturer and ‘go-to’ distributor of hygienic and best quality food products
and beverages in South Asia whereas the vision is to be the 1 st thought of resource-
constrained customers of Bangladesh, by 2025, when they need to satisfy their hunger or
quench their thirst. As a startup company, SF&B will focus on its marketing drive with its
tech- savvy employees and will distribute food and tea products with private branding to
the resource- constrained customers at an affordable price with comparable quality. With
time, SF&B will generate revenues required to set up manufacturing plants of its own for
processing food and tea and will start to export food and tea products outside the country. I
have provided most of these details based on my knowledge from my MBA courses. I also
collected information from some other sources. I have clearly described ‘Strategic intent’,
‘Strategic inflection points’ and ‘SWOT analysis’. I have also analyzed the food and
beverages industry using ‘Porter’s five competitive forces analysis’ and ‘Porter’s five
generic competitive strategies’ and provided some recommendations for smoother
conducting of business for SF&B.
 Contents

Part A (Question 1)
Introduction…………………………………………………………………………………………… 6

Origin of Study & Research Methodology………………………………………………… 7

Company Profile…………………………………………………………………………………….... 8

Company Logo & Various Products of SF&B…………………………………………….... 9

Industry Background………………………………………………………………………………… 10

Mission, Objectives, Vision & Core Operating Values…………………………………… 11

Strategic Intent of SF&B………………………………………………………………………………… 12

Strategic Inflection points of SF&B…………………………………………………………............ 14

SWOT Analysis of SF&B……………………………………………………………………………………… 15

Industry Analysis

 Porter’s Five Competitive Forces Analysis……………………………………………................ 21

 Porter’s Five Generic Competitive Strategies…………………………………………………… 23

Strategic Alternatives…………………………………………………………………………………… 26

Recommendations & Conclusion……………………………………………………………. 27

Part A (Question 2) Part A (Question 3)

TOWS Analysis…………………... 29 Differences between Strategic and
Operational
Planning……………………………………………………. 33

Stages of Operational Planning in SF&B……. 34

Part B (Question 4 - 1st Part) Part B (Question 4 - 2nd Part)

Strategic Intent………………….... 37 Strategic Inflection Points.…….…………………….
40

Strategic intent of SF&B….……. 37 Strategic Inflection Points of SF&B………………

40

Strategic Options for SF&B…………………………. 41

References………………………………………………………………………. 44

Part A

Question 1: Considering the situation in Part A of the above text, please

write a strategic plan for SF&B briefly covering all elements of a good
strategic plan as you are taught in the class.

This question has been answered in the following pages (6- 27).
 Introduction

Sami Muntasir and Sanila Shawlin Chowdhury developed a strategic plan for their startup
company Star Food and Beverage LTD. They developed it with the help of the newly
appointed CEO who has 15 years of experience in Food and beverages industry. They make
a plan of next 10 years roadmap for supports, services and roadmap organization. They
plan to check their planning in every 6 months and slightly or fully modify if required.

This plan was developed with broad involvement and guidance from the owner as well as
entrepreneur Sami and Sanila. They plan it with their experienced CEO along with the
department heads of Accounting and Finance, Marketing and sells and HR division. This
board committee met many times to set up a mission, vision, strategy, core operating value
for approaching organization’s work. In the meeting, they set work session and set the
direction of complete work strategy of how they proceed in next stage.

They also performed environmental scanning and organizational assessment that helped
them identify internal strengths and weaknesses and external opportunities and threats
that they might have to deal with over the next ten years and set the context for the choices
reflected in this strategic plan.

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 Origin of Study

This assignment is requirement of my ‘Strategic Planning’ (MGT670) course of MBA

program. My respected faculty Dr. MD. Tabarak Hossain Bhuiyan selected an assignment
and assigned me to make a strategic plan for Star Food and Beverages Ltd. (SF&B). I have
tried to make the assignment as informative as I could. I tried enormously to relate all the
elements that my respected faculty taught me in the class. I am very thankful that I
completed the assignment where I actually learnt a lot about planning a strategical
roadmap for a startup company.

Research Methodology

In order to make this informative strategic planning assignment, I have used secondary
methods of research to find out the best strategic plan to make this assignment perfect. For
secondary research, I have gone through online articles, websites, newspaper and journals.

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 Company Profile

Name: Star Food & Beverage Ltd. (SF&B)

About: A business entity for distributing food and tea products with its own branding
Date of Foundation: May 17, 2020
Founders and Chairmen: Sami Muntasir and Sanila Shawlin Chowdhury
History: Two course mates Sami and Sanila were motivated by the richly designed lectures
of their instructor of Strategic Planning which helped them realize it is better to give
employment than to seek it. Sanila also refused her invitation from a multi- national
company. These two contributed Tk 25,00,000 each and laid the foundation of SF&B.

Key People:

Mr. C, CEO with fifteen years of experience in similar industry

Mr. A, Head of Accounting and Finance:

Mr. M, Head of Marketing and Sales

Mr. H, Head of Human Resources

Dr. Md. Tabarak Hossain Bhuiyan, Financial advisor

Headquarter: Dhaka, Bangladesh

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Company Logo:

Various Products of SF&B:

Tea Products: Tea bag, Green tea, Black tea, Tulsi Tea, Garlic Tea and Premium tea

Biscuits: Toast biscuits, Dry cake, Cream biscuits, Coconut biscuits, Digestive biscuits,
Energy biscuits, Orange biscuits and Salty biscuits

Noodles: Soup noodles, Pasta noodles, Vegetable noodles and Chicken noodles

Convenience and Time-saving Cooking Items: Biryani mix, khichuri mix, Firni mix, Biryani
masala, Halim Mix, Chotpoti masala, Tandoori masala, BBQ masala, Cereals, Pulses and
Edible oil

Ready-to-eat Snacks: Chanachur, Fried Dal, Potato Crackers, Muri, Jhalmuri, Sauce,
Ketchup, Jhuribhaja, Chutney and Pickles

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Frozen Food: Paratha, Rooti, Chicken sausage, Chicken nuggets, Chicken Fry, Chicken shami
kabab, beef shami kabab, mutton shami kabab, Chicken samosa, Vegetable samosa, Chicken
singara, Vegetable singara, Chicken meat ball, Chicken spring roll, Dal puri and French fries

Industry Background

Food and beverage industry is a rapidly growing sector in Bangladesh. The food and
beverage is a fastest growing industry in Bangladesh since the year of 2000 as Bangladesh
is an agriculture based country. This industry alone contributes 22% of the economy in the
nation and around 2.45% of the nation's total workforce. Bangladesh being an agricultural
nation with an extensive population can contribute to a great extent to the food and
beverage industry. Bangladesh is additionally affecting the global market by sending out
food and beverage to 90 unique nations on the planet. In 2010, Bangladesh exported $700
million worth processed food and beverages. Although commercially food processing
sector started in 1960s, it got real momentum in 1980s. Major food processing subsectors
in Bangladesh include dairy, edible oil, sugar, rice, wheat, fruit, vegetable, tea, poultry, beef,
pulse, spice and fish processing industries. Transcom Beverages Ltd, Square Food and
Beverages Ltd, Partex Beverages Ltd., Akij Food and Beverages Ltd. and Pran Foods Ltd. are
the top food and beverage companies in Bangladesh at the moment. Basically, there are two
main reasons why Sami and Sanila entered into food and beverage industry. We can clearly
understand from industry background that how promising the prospect is of this particular
industry in Bangladesh. Secondly those two had financial issues and number of
shareholders are only two initially. The nature of the industry allowed them to start
business with limited investment. But it is true in this sector as well, they have to face
tough competition. This is where their instructor of ‘Strategic Planning’ course and their
lessons from him might come into play towards shining amidst the competition.

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Mission:
We want to be the ‘first-rate’ manufacturer and ‘go-to’ distributor of hygienic and best
quality food products and beverages in South Asia.

Objectives:
 To manufacture and provide the supreme level of hygienic foods

 To explore and lead attractive segments of market

 To implement world class manufacturing standards and quality

 To ensure that our products are pulled away by the customers

 To focus on continuous upgradation in technology of manufacturing and distributing

products

 To find new ways of lowering costs so that prices remain within consumer’s reach

Vision:
By 2025, we want to be the 1 st thought of resource-constrained customers of Bangladesh,
when they need to satisfy their hunger or quench their thirst.

Core Operating Values:

Business principles and practices that guide the conduct of its business, pursuit of its
strategic vision and the behavior of company personnel are called company’s values.
Following values of SF&B are its core competencies:

Scientific Mindset: We move quickly and deliberately, using data to guide our decisions
and testing to achieve breakthroughs.

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Openness: We welcome new ideas and opinions, even if they challenge our beliefs. We
actively listen with humility and respect.

Participation: We communicate directly, share feedback at all levels, and engage in debate
while maintaining our objectivity.

Innovation: We believe in a workplace where you’re safe to try new things—where we can
push the boundaries of the norm and learn from things that don’t always go according to
plan.

Excellence: We accomplish challenging works and achieve incredible things. Excellence is

one of our core values, and we always take the time to celebrate this.

Mastery: We offer an environment of continuous development where you can do, and
become, your best.

Go the extra yard: Go beyond satisfying customers, delight them.

Do what's right: What is right isn’t the same as what is easy.

Be transparent: Share information. Share mistakes. Share victories.

Deliver on commitments: We focus on a few key priorities and ensure we deliver with
quality on time, every time.

Accountability: We do what we say we’re going to do. If something happens to prevent

that, we determine the new course and communicate quickly.

Get stuff done: We work with a sense of urgency. Everything is everyone’s responsibility
and we own our collective results together. Our employees are empowered to make
decisions that are best for the long-term health of the business.

These values form the core of SF&B. These values guide actions and behavior of SF&B. They
are signals of how SF&B serve its clients by translating passion into practice.

Strategic Intent of SF&B:

In the field of management and organizational development, strategic intent is defined as a
compelling statement about where an organization is going that succinctly conveys a sense
of what that organization wants to achieve in the long term. Strategic intent answers the
question: “What exactly are we trying to accomplish?” A company exhibits strategic intent
when it relentlessly pursues an ambitious strategic objective and concentrates its full

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resources and competitive actions on achieving that objective. SF&B can concentrate its
limited resources in the following areas:

Marketing Drive: It is always essential for a start- up company to focus on its marketing
drive for establishing its brand in the segments of market it will serve. SF&B can focus on
quality digital marketing campaigns that can be run by its tech- savvy employees.
Consumers now want all the information readily available about a product in one place. So,
the novice entrepreneurs of SF&B can consider an online app that will keep the vendors
and customers aligned with the recent modifications of their organization.

Turning Employees into Assets: A sound job environment includes highly motivated
individuals and the highly experienced mentors. As there are a number of promising
freshers in SF&B, they should be provided with excellent mentorship by the experienced
employees and extensive on-the-job-training programs. They should be provided with
essential trainings before being assigned with any real responsibility. On one side, this will
help them grow and become prepared for the upcoming challenges and on the other side, it
will help the company turn its fresher employees into assets who will ensure the smooth
running of company’s business.

Continual Improvement: Every staff’s skills should be analyzed by avoiding structural or

chain of command priority. Coaching the them in different arenas like in applied
mathematical tools, drawback resolution, price engineering, and team building must to be
ensured. SF&B should figure out clear milestones and review mechanisms to trace progress
and make sure that internal recognition and rewards reinforce desired behaviors. The goal
is to form some teams with similar objectives which will smoothen SF&B’s day-to-day
operations.

Cost Reduction: As SF&B’s vision is to attain resource- constrained customers by being

their first thought, it has to always focusing on lowering its operations and distribution
costs. If not, they have to sell high- cost products at lower price and end up with counting
loss at the end of a fiscal year. They can lower the costs by making each employee expert in
2-3 different arenas by providing them with extensive on-the-job-training program. It will
ensure that one employee can do the work of 2 or even 3 at a time. They will also have to
research the market extensively for selecting the right vendors who will provide them
similar quality products with lowest price. They can identify the best delivery man, in
terms of distance, by tracing them all by an online app for distributing a product to a
customer.

The Synergy of the Staffs: The whole is greater than the sum of its parts. As a start- up
organization, this is a very important lesson for all the employees of SF&B. They have not
enough experienced manpower, no manufacturing unit of their own, their resource is also

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limited but if they stay strong as a unit and turn their combined skills and experience in
revenues, they can complete the journey on a high. A sound working environment,
increased interaction between the staffs and their synergy for the betterment of the
company above all can ensure this.

Strategic Inflection Points of SF&B:

When there is an order of significant change in a company’s environment that dramatically
affect its prospects and mandates radical revision of its strategic course, such occasions are
known as strategic inflection points. These are time periods of disruptive changes in an
organization’s business which call for appropriate response in addressing the situation.
Therefore, it is a decision moment.

Strategic Inflection Points of SF&B may come in the following forms:

Shifts in Consumer Preferences: Though the economic condition and political situation of
the country are business friendly and tea consumption is on the rise, all on a sudden the
import of coffee has increased significantly. It has been found that some people in urban
areas are preferring coffee to tea in recent times. This has been a major concern for the tea
manufacturing and distribution companies. Because, coffee is a clear substitute of tea. So,
tea consumption is expected to fall gradually in the urban areas. As far as it is concerned
with tea, it is going to be tough for SF&B to establish a strong brand with falling demand of
its product in the urban areas.

Lagging behind in Competition due to Lack of experience: Apart from its CEO and 3
department heads, most of the employees of SF&B are fresh graduates or post- graduates
from the universities. Even the owners are almost freshers and they don’t have any
practical experience in business. So, this lack of experience can create some foot holes in
their difficult journey to be one of the well- known brands in the food & beverage industry
and their competitors, who are well- established by now, can take advantage of this lacking.
Although their fresher employees are promising to uphold the status of SF&B, they may
face harsh challenges to cope up with the experienced professionals working for other
brands in the food and beverages industry.

Economic Depression as an aftermath of Coronavirus Pandemic: Due to Coronavirus

breakout, consumers’ disposable income is decreasing and demand is going down as well.
Time may arrive in foreseeable future when consumers will only prefer the essential goods.

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Though necessity includes some of the food products, it is going to be tough for a new
brand to cope up with these uncertainties.

SWOT Analysis of SF&B:

SWOT analysis is a powerful technique for understanding organizations strength and
weakness and looking for the opportunities and threats it may face. Used in a business
context it helps organization crave a sustainable niche in a market. This analysis is mainly
based on a current market situation.

Strengths:
Trending Business: SF&B mainly distributes processed foods and tea. The tea consumption
and the demand for processed food are on the increase. For a start- up company to engage
in a trending business is a sheer blessing. Because it does neither have to put money and
efforts in informing the consumers about the specifications of the products nor creating the
demand of the products they will market or distribute. They just have to establish their
brand with products the demand of which is already on the rise in the market and win
reliability of customers. So, they can save time in this field and spend more time in other
aspects of a start- up business, like product differentiation, producing better quality
products and market segmentation.

Location Flexibilities: As SF&B is a start- up business, it has a scope to research the current
market and set up the distribution centers in the areas from where they can distribute
products with low transportation costs. This cost saving can help them in the long run to
expand the company and put lot more resources into its marketing drive to establish their
new brand. The reputed food and tea distribution companies don’t have this flexibility.
SF&B has also flexibilities to place their distribution centers where there is no other center
like this. As a result, they can win that portion of market with low price considering their
transportation costs are much lower than their competitors and also with quick delivery.
As the demand for tea is comparatively higher in rural areas, they can set up more tea
distribution centers outside Dhaka.

Mixture of Age with Beauty: The CEO of SF&B has 15 years’ experience in the food and
beverage industries. The dept. head of Accounting & Finance, Marketing & Sales and HR
Division are also experienced in this business sector. Apart from that, most of the

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employees are fresh graduates or post- graduates from the universities. Even the owners
are almost freshers. So, SF&B has a perfect blend of relevant experience with impulsive
youth. Recently graduated freshers, backed up by some experienced mentors who have a
proven track record of service in food and beverages industry, are prepared to take the
challenge of popularizing an unknown brand in a competitive industry. While the
spontaneous freshers will think of many impromptu ideas to make the operations and
marketing drives successful, their experienced department heads will select the
appropriate ones among these and will help the freshers execute the selected plans.

Tech- savvy Employees: We are living in a world of 24/7 connectivity. We can connect with
anyone or access any information just by looking at a screen, and we like it that way. In fact,
most of us can’t imagine life without that screen. The question is no longer who is looking
at the screen (we all are), it’s about what screen are we looking at. The first screen –
television – allows companies to send information directly into consumers’ homes. The
second screen – the personal computer – allows immediate customer feedback and the
ability for companies to interact with their customers even more. The third screen – the
mobile device – changes everything. So, living in this 21 st century, companies have to be
tech- savvy to even survive, let alone being successful in a mountain climbing task like
popularizing an unknown brand. As SF&B’s most of the employees are fresh graduates or
post- graduates, most of them, especially the BBA or MBA degree holders in Marketing are
well informed about digital marketing and can help the company immensely by running
quality digital marketing campaigns to win more and more consumers and establish the
brand in the long run with the mixture of advertisements and blogs in the social medias
and internet highlighting the quality and unique features of their products. With the help of
modern technology, they can also launch an app by which their consumers can order
different food and tea products.

Business Acumen of Owners: It is not money but brilliant idea what matters in becoming
an entrepreneur. The young entrepreneurs of SF&B have proved that once more. They
don’t have practical experience but they do have sound knowledge on Strategic Plan,
Operational Plan, Business Plan and other subjects taught in their MBA. Especially they
learnt quite well in the ‘Strategic Planning’ course to emerge as successful entrepreneurs.
They are capable to set a quite clear mission and vision statement and also the appropriate
core operating values for conducting, monitoring and controlling the company’s activities
in the long run. The learnings of the ‘Strategic Planning’ and ‘Marketing Management’
course will also help the novice entrepreneurs to analyze the food and beverages industry
perfectly and to set brand positioning. They hired a very capable person for CEO position
who has 15 years’ experience in the food and beverage industries. And that CEO hired a few
other experienced professionals to head Accounting & Finance, Marketing & Sales and HR
Division. So, the company’s management is in good hands. The entrepreneurs have also
ensured that they don’t spend too much behind experience by giving opportunities to a lot
of promising freshers. Visibly, it has given recently graduated or post- graduated job
seekers opportunities to prove themselves. In the hindsight, it has reduced company’s cost,
as demanded salary of freshers is much less than that of the experienced professionals, and
also helped the company to run quality digital marketing campaigns by the tech- savvy
freshers.

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Weaknesses:

Poor Financial Foundation: Two novice entrepreneurs start up a business in the

competitive food and beverages industry with only 500,000 Tk. In this 21 st century, this
amount of money is not actually enough to guarantee a smoot running business, despite all
the brilliant ideas behind it. They have hired some experienced professionals including the
CEO whose salaries are quite high. And they have to spend a lot of money behind the
marketing drive for brand positioning of a completely new and unknown brand. Although
they have secured some loan from a bank with the help of their ‘Strategic Planning’ Course
instructor, they have to pay monthly interests to repay this loan. Compared to other
developed nations, Bangladesh has a significantly higher interest rate. The average interest
rate on loans is between 10–12%. Besides, in first few months, there will be very low
amount of profit, whereas most of the time and money will be spent in researching the
market, segmenting the market, placing the distribution centers and running the marketing
campaigns. So, the financial foundation of ‘Star Food and Beverages Ltd.’ Is not that
promising and remains vulnerable to the market leaders or other companies in this
industry.

Lack of Experienced Professionals: The CEO of SF&B has 15 years’ experience in the food
and beverage industries. The dept. head of Accounting & Finance, Marketing & Sales and
HR Division are also experienced in this business sector. But apart from that, most of the
employees are fresh graduates or post- graduates from the universities. Even the owners
are almost freshers and they don’t have any practical experience in business. So, this lack of
experience can create some foot holes in their thorny climb to be one of the well- known
brands in the food & beverage industry and their competitors, who are well- established by
now, can take advantage of this lacking. Although their fresher employees are promising to
uphold the status of SF&B, they may face harsh challenges to cope up with the experienced
professionals working for other brands in the food and beverages industry.

Lack of Practical Experience of Owners: Although the young entrepreneurs of SF&B have
sound knowledge on Strategic Plan, Operational Plan, Business Plan and other subjects
taught in their MBA, they don’t have any practical experience in business, let alone
expertise in Food and beverages industry. Because there is a clear difference between
academic business learnings and businesses in reality, the lack of experience in the
business arena may create troubles for them in setting appropriate missions, visions and
core operating values for the company. Some of their competitors may have fewer
academic qualifications than these two novice entrepreneurs but they do have a sixth sense
about market and consumers and know exactly what strategy to employ, when to employ
to capture a good portion of the market and keep their competitors at bay. So, their lack of
experience in business arena is a major foot hole in the path of SFB’s success.

An Unknown Brand: SF&B have to launch and market a completely new brand that people
have never heard about. The market is quite captured by well- established brands launched

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by Transcom Beverages Ltd. (TBL), Square Food & Beverage Ltd. (SFBL), Akij Food and
Beverage Ltd. (AFBL), PRAN Foods Ltd., IFAD Multi Products Ltd. and Fu-Wang Foods Ltd.
So, establishing a new private brand is quite challenging in this industry. It will cost time
and money, both, to research the target audience and the competitors. Actually, Branding
consists of a set of complex branding decisions. Major brand strategy decisions involve
brand positioning, brand name selection, brand sponsorship and brand development. So,
SF&B has to go a long way to establish their brand in a well- established industry.

Conflict between Novice Entrepreneurs and Experienced Staffs: The founders of SF&B
hired a CEO who has 15 years’ experience in the food and beverage industries. The dept.
head of Accounting & Finance, Marketing & Sales and HR Division are also experienced in
this business sector. But the owners are not experienced business professionals. So, the
academic knowledge or expertise of the novice entrepreneurs may clash with the business
expertise
and calculated approach, cultivated by years of experience, of their employees. Although
both parties are pursuing the same goal which is establishing a new business in a
competitive industry and their clashes may be a pathfinder to unprecedented and effective
solutions in the business arena, if by any chance, these clashes go an extra yards and makes
the both parties stand in each other’s way, it will lead to indecisions for which their
business might have to suffer repercussions.

Opportunities:

An Online Application: Simply put, marketing a new business like the one of SF&B’s is a
massive challenge due to limited resources, money and time. Thus, irrespective of any
business idea and how well planned it is, entrepreneurs have to be sure of every effort they
put into developing marketing strategies for their startup. Today's buyers are used to
having detailed data on everything from product availability and pricing to their
order's precise location en route. Anything less is quickly becoming dissatisfactory. If SF&B
wants to prevail in this digital era, they will need more than great service- they will need to
make life easy for your customer. People no longer have the time or desire to hear a sales
call or flip through a dense paper catalog. Instead, people are leaning towards
performing their own research, inquiries, and purchases online and at their own
convenience. Hence, e-commerce's a rapid success. One of the most important things a
mobile app will offer to consumers is awareness of and communication with SFB’s brand.
And through that regular interaction with the target markets, it will be fostering trust.

Food Manufacturing Factories: Food processing is the transformation of agricultural

products into food, or of one form of food into other forms. Food processing includes many
forms of processing foods, from grinding grain to make raw flour to home cooking to
complex industrial methods used to make convenience foods. SF&B has a good scope of
establishing new food processing factories if they are successful to establish their business
in near future. Both the sound economic condition of the country and the business- friendly
political situation are in their favor. The demand for processed food is also on the increase.

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So, if SF&B can earn a good amount of revenue taking advantage of all the positive factors,
they will be able to build a food processing factory of their own.

Tea Processing Plants: Tea processing is the method in which the leaves from the tea plant are
transformed into the dried leaves for brewing tea. SF&B aspires to build a tea processing plant
of their own and they can do so by taking advantage of the positive factors mentioned in
the above paragraph.

R&D Department: After building the manufacturing plants, SF&B can set up a robust R&D
department with high- skilled food engineers for food processing. Because, R&D
breakthroughs lead to opportunities for marketers to position and promote products
using health claims backed by science. Further, clean label viability is a huge advantage for
food and beverages in the age of the hyper-educated consumer. Equally important to
consumers, however, is maintaining appealing textures, flavors and other factors that
impact satiety, without any additives. Many companies with established product lines are
developing new formulas to decrease additives and preservatives, thereby increasing
freshness and consumer friendliness. While consumer preferences for healthy food and
beverage choices and their corresponding purchases are driving the corporate decisions,
what’s giving manufacturers traction in the marketplace is the broader research and
development (R&D) that goes on behind the scenes.

Business- friendly Economic and Political Conditions: SF&B is going to start business in
Bangladesh when annual GDP of Bangladesh is 286 Billion USD and GDP growth rate is a
striking high of 8.20%. Inflation rate is also stable around 5- 6% for some years now. And
as far as it is concerned with the political climate, that is also in rest for several years. So,
these favorable signs might help SF&B immensely to grow.

Consideration of Sustainability and Environment Issues: Consumers are looking for

products that support sustainability initiatives and have minimal environmental impacts.
Some plant-based foods that have gained popularity in recent years are coming under
greater scrutiny, however. An example is the surge in almond milk consumption, forcing
farmers to increase yields to the deadly detriment of honey bee populations and to the
scourge of consumers. Using ingredients that can ensure sustainability, reduce waste and
maintain clean labels and transparency may help SF&B to meet the requirements of its
weather shifting consumers’ preferences and maintain the ethics of the business.

Use of Whey Protein: SF&B can consider the use of whey protein concentrate in
formulations. As they have no food manufacturing plants yet, they can convince the
manufacturers to use whey protein concentrate from whom they purchase the food
products. There are many whey ingredients to serve different application needs and, unlike
the next fad ingredient that may not resonate with consumers once a product finally hits
the shelves, whey protein has proven staying power and numerous health benefits. It’s a
recognized and trusted ingredient that is shelf stable and a less costly alternative to its
fresh counterparts, including butter, milk, cream, yogurt, eggs, oil and more. Most
importantly, however, is that whey protein maintains or enhances a product’s flavor,
texture and mouthfeel.

19
Internet of Things (IoT): The incorporation of technology into R&D laboratories can make
processes more efficient and improve food safety. The Internet of Things (IoT) allows
unprecedented accuracy in data collection, workflows and experimentation that R&D
engineers can capture, repeat and build upon to improve results. Of concern to some
corporations, the technology leveraged by R&D departments may be disruptive to the way
things have always been done. Companies and their CEOs need to look past potential
disruptions and recognize the benefits that many technologies can bring in order to fuel
long-term growth, and support R&D spending in this area.

Threats:

Increased Competition: This can be a major threat to SF&B’s success. This threat often
arises from the failure of establishing a strong brand. Credibility often starts with a great
website, a focused online marketing strategy, and media coverage. Just as important, SF&B
has to make sure they are clearly communicating why they are in business- not just what
they do.

Sluggish Demand: SF&B needs to spend some time in improving their online marketing.
Strategies such as blogging, social media outreach, and search engine optimization are all
great and inexpensive ways to increase marketing efforts, especially because these provide
an opportunity to the business entities to track their success easily. Worldwide, thirty-
seven percent of entrepreneurs identified sluggish demand as the biggest threat to their
start-ups. It doesn't matter how many positive signs economists think they see, without
customers, businesses can't grow.

Shift in Consumer Tastes: Though the economic condition of the country is quite good, the
political situation is business friendly and tea consumption is increasing, all on a sudden
the import of coffee has increased significantly. It has been found that some people in
urban areas are preferring coffee to tea in recent times. This has been a major concern for
the tea manufacturing and distribution companies. Because, coffee is a clear substitute of
tea. So, tea consumption is expected to fall gradually in the urban areas. As far as it is
concerned with tea, it is going to be tough for SF&B to establish a strong brand with falling
demand of its product in the urban areas.

Coronavirus Pandemic: Due to Coronavirus breakout, consumers’ disposable income is

decreasing and demand is going down as well. Most of the people are just trying to
consume the essential goods only. Though necessity includes some of the food products, it
is going to be tough for a new brand to survive these uncertain days, let alone their triumph
to glory.

20
Industry Analysis:
An industry is the collection of competitors in the business of similar products or services.
In addition to five competitive forces analysis, SF&B needs to consider the industry’s
economic characteristics. Such as- industry size, growth, market size etc.

Porter’s Five Competitive Forces Analysis:

Competitive Threat of New Threat of Suppliers' Buyer's

Rivalry Entrants Substitutes Bragaining Bragaining
High High Moderate Power Power
Moderate High

Figure: Porter’s Five Forces Model for SF&B

Competitive Rivalry: This focuses the number and strength of the competitors. When
rivalry is minimal, the business has huge strength and high profits. On the contrary if
rivalry is intense, other companies may draw customers through price cuts and suppliers
and buyers may switch if they find a better deal elsewhere.

SF&B is entering into an industry that is well- established and the market share of Food &

21
Beverages industry is mostly captured by giant food brands. So, competitive rivalry of
SF&B is high.

Threat of New Entrants: A barrier to entry is a high cost or other type of barrier that

prevents a business startup from entering a market and competing with other
businesses. Barriers to entry can include government regulations, the need for licenses, and
having to compete with a large corporation as a small business startup. If there are high
entry barriers, existing competitors can definitely preserve a favorable position.

Owing to the brand value and quality products of the giant competitors of Food &
Beverages Industry in Bangladesh, there is high entry barriers in this industry for new
entrants. It is to be noted that SF&B faced the same complexities entering into this industry.

Threat of Substitutes: It is the availability of other products that a customer can purchase
from outside an industry. When there are substitute products available, the competitive
structure of the industry is threatened.
As import of coffee is increasing suddenly and SF&B is yet to launch its brand, then as far as
it is concerned with tea, threat of substitutes for SF&B is high. But overall, considering the
promising business professionals engaged with SF&B in establishing its brand image, the
threat of substitutes is moderate.

Suppliers’ Bargaining Power: Suppliers’ bargaining power is determined by the ease of

raising the price for the suppliers. If there are more suppliers to choose from then it is
easier to choose the cheaper option. But if there are few suppliers then suppliers charge a
lot.

Since Food and Beverages Industry is huge and there are lots of suppliers available but
considering that SF&B is a new business entity, the bargaining power of SB&B’s suppliers is
moderate.

Buyers’ Bargaining Power: It is determined by the ease with which buyers can lessen the
price. When there are only a few savvy customers, they have more power. But the power of
business increases when there are plenty of customers.

SF&B is a new business entity in a well- established industry. Most of their customers are
either unaware or just informed of the brand of SF&B. And to create a potential customer
base, SF&B might have to sell products at a cheaper price. So, bargaining power of SF&B’s
buyers is high.

22
Porter’s Five Generic Competitive Strategies:

It is basically ways of competing. The relative position of a firm or company determines if

its profitability is greater or less than the industry average. There are mainly two types of
competitive advantage a firm can have which are low cost or differentiation. These two
advantages give rise to five generic strategies to procure above average performance in
industry which are Overall low- cost provider strategy, Broad differentiation strategy, Best
cost provider strategy, Focused (market niche) strategy based on low cost and focused
(market niche) strategy based on differentiation.

23
Overall Low-cost Provider Strategy: This strategy generally consists of an organization
attempting to gain a market share by appealing to cost-conscious or cost-restricted
customers or consumers. Therefore, it is the aim of the organization to become the lowest-
cost producer in their chosen industry. Although any organization will aim to remove any
unnecessary costs, those employing this strategy prioritize lowering all overheads.

Often, this can be achieved through mass-production of products, allowing the organization
to exploit the economies of scale; however, costs can be cut during many stages of the
production process.

Organizations exhibiting cost-leadership often exhibit a number of traits and attributes

which make them suited for this approach:

 Access to capital or technology required to drive costs down

 High levels of productivity
 High efficiency and capacity utilization
 A low-cost base (e.g. labor, materials, facilities) and a method of maintaining this
 Use of bargaining power to negotiate low production costs
 Access to effective distribution channels

24
As SF&B is a new business entity having no manufacturing plants and it could not establish
effective distribution channels yet, this strategy implementation will not be fruitful for
them.

Broad Differentiation Strategy: The general focus of differentiation- led organizations is to

make their products different or more attractive than any other within the industry to
achieve a competitive advantage. These organizations generally target larger markets and
focus on differentiation on a much wider scale within the industry than would a cost-led
company.

Here are the most important traits associated with differentiation-led organizations:

 Strong research, development and innovation

 Superior product quality
 Recognizable branding, effective branding and marketing
 Industry-wide distribution within all major channels (stocked by most retailers)

SF&B is a new business entity with no manufacturing plants for producing their own
products, let alone research, development and innovation. They are going to distribute
products with private branding. The brand is not still a recognizable one though marketing
drive is being carried on to make it recognizable in foreseeable future. And lastly, they are
too new in the food & beverages industry and they have not enough manpower or
resources to occupy industry- wide distribution within all major channels. So, it is not a
suitable strategy that SF&B would benefit from.

Best Cost Provider Strategy: A best-cost strategy relies on offering customers better value
for money by focusing both on low cost and upscale difference. The ultimate goal of the
best-cost strategy is to keep costs and prices lower than other providers of similar
products with comparable quality and features.

This strategy is suitable for low- cost provider and the high- end differentiator companies.
The danger of a best-cost provider strategy is that a company using it will get squeezed
between the strategies of firms using low-cost and differentiation strategies.

Star Food and Beverage Ltd. could consider going for best cost provider strategy if they had
manufacturing plants and research and development centers to differentiate products.
Because, even if they decide to distribute the products of the high- end differentiator
manufacturers by using private branding at a lower cost compared to that of the low- cost
providers, they still would fail to execute this strategy, reason being their inaccessibility to
resources to hire enough manpower who will ensure industry- wide distribution within all
major channels.

Focused (market niche) Strategy Based on Low Cost: This is a strategy where businesses
selling similar products in a given niche lower their prices in order to increase revenue and
gain a competitive advantage. Instead of compromising on value or throwing already

25
scarce money into improving a product, lowering costs is a better way of attracting
customers.

Buyers are always comparing prices whether they are billionaires, millionaires or just
regular folks. Furthermore, if a business entity is offering the same product at affordable
prices than every other entity, it is definitely guaranteed that there will be an increase in
traffic towards that business.

As SF&B is a new business entity with insufficient resources and manpower, it is wise for
them to identify a segment of the food and beverages market and establish their brand
there by gaining popularity. And for this to happen, they have to implement focused
(market niche) strategy based on low cost. Because by lowering costs than other
competitors in a market segment while offering the similar product without compromising
quality will help them charge lower prices and win that segment of the market. It will also
help them cut operational costs, increase sales, enjoy business growth opportunities,
expand customer base and interact closely with target audience.

Focused (market niche) Strategy Based on Differentiation: In a differentiation-

focus strategy, organizations look to develop product differentiation, but only within one or
a smaller number of market segments. As these organizations have identified a smaller
consumer group to focus on, they can more specifically appeal to the needs and wants of
this group than could an organization which is attempting to differentiate for a wider
population.

For this strategy to succeed, an organization needs to first identify that a consumer group
has a different set of needs than does the wider market population. If there is no variation
in need, then there is no valid basis for differentiation. Alongside this, the organization also
must ensure that another competitor is not already appealing to the specific and unique
needs that they have identified.

SF&B is a new business entity with no manufacturing plants or research and distribution
centers of their own. But they might sense an opportunity to distribute the food and tea
products of the high- end differentiator manufacturers in a small market segment using
private branding and charging higher prices to establish their brand value. But there are
risks involved in implementing this strategy. Although they will distribute the highly
differentiated products using private branding, their brand is still not a recognizable one
and so they might fail initially to attract the number of customers required to stay in
business. Another risk is that they have to purchase these superior products from the
manufacturers
at a high price but they will struggle to sell these products at similar high prices because of
their yet unrecognizable brand, leading to a massive loss in monetary terms.

Strategic Alternatives:

26
Today’s world of business has become a battle ‘survival of the fittest’. A basic strategic and
sustained advantage to win and prevail over rivals in the red ocean market will definitely
come from the differentiated use of such resources, organizational capabilities, and the
choice made from various strategic alternatives.

Strategic alternatives refer to different courses of action which an organization may pursue
at a point in time.

Strategic alternatives generally are:

 mutually exclusive, never identical
 plausible- suitable to be worked out
 worthwhile- value added, commensurate with the vision and objectives

Two Strategic alternatives SF&B can consider when going gets tough or a sudden
disruptive economic or some other changes come along.

1. SF&B can convince their vendors to use whey protein concentrate in formulations when
they manufacture SF&B’s products. If the vendors are convinced, SF&B can establish
their brand with advertisements of whey protein concentrate inclusion in their
products. This inclusion will make their food products more healthy and richer in
nutrition. This differentiation in products will incur some cost for sure but as a startup
business, if this extra cost helps win more customers, then it is worthwhile. It will not
collide with vision as SF&B’s main focus is to lower the cost with comparable quality.
So, with this upgradation in quality of their products, they will not charge higher prices,
instead they will find new ways of reducing their costs and keep the prices within the
rich of the resource- constrained customers.

2. SF&B can get into a business partnership with a local delivery service to ensure
effective delivery. As local delivery services have thorough knowledge about the
whereabouts of the customers in their locality, they may provide a greater service in
terms of product delivery. Implementing this strategy, SF&B can cut off their
transportation cost and time spent in confirming customer’s exact locations and
locating available riders. They can invest this time and savings to the other fields to
grow as a startup business, like in their marketing drive.

Recommendations:
 I recommend that as a new business entity, SF&B should focus on their marketing drive
more than anything else. Extensive market research and digital marketing campaigns
have to be carried out to grow.

27
 The entrepreneurs of SF&B might consider allowing some leeway to their CEO and
experienced employees. If the experienced employees enjoy a considerable amount of
freedom, they can apply and exercise their business expertise, garnered by years of
experience, into the progressive journey of the company.

 Because its founders are young post- graduates, SF&B might consider incorporating
theory of separation of power and theory of checks and balances side by side in its
workplace. This theory of separation of power demands that no one should interfere
the works of other, each employee must act without the interference of others and no
one is dependent on the other. This theory can be applied only if the CEO can strike a
balance between the owners and the employees under him by utilizing the theory of
checks and balances.

 Time to time, SF&B should consider strategic alternatives that I have proposed. In 21 st
century, world is changing at every moment and nothing is certain. While a strategy
may seem just perfect today, tomorrow that becomes worthless. So, when going gets
tough due to disruptive economic or some other charges, SF&B should choose one of its
strategic alternatives to get back in track to achieving its vision.

Conclusion:
The novice but highly ambitious entrepreneurs want to take their startup company, Star
Food and Beverage Ltd. (SF&B) to new heights. The strategic roadmap delineated in this
assignment will help them to do so. They have to build a control mechanism and check all
the progresses are leading to the destination they want to reach with SF&B. They have to
always keep their eyes open to new opportunities and technological upgradation. If the
proposed vision seems unachievable due to disruptive changes in the economic conditions
of the country, the top management will have to evaluate the proposed strategic
alternatives and implement one of them to let SF&B pass through the tough time. Because
customer satisfaction is the key to success for any business, SF&B must concentrate on
delighting customers with lucrative offers, loyalty programs, high quality products, timely
delivery and superior customer service.

Part A
28
Question 2: Discuss, how will you apply the TOWS strategy on the
problems and prospects as identified by the SWOT analysis?

This question has been answered in the following pages (29- 31).

29
TOWS Analysis:
A TOWS analysis is a variant of a SWOT analysis and is an acronym for Threats,
Opportunities, Weaknesses and Strengths. 

Similar to a SWOT, a TOWS analysis will involve the identification of an organization’s

strengths, weaknesses, opportunities and threats; however, often a key criticism of a SWOT
analysis is that it doesn’t show the relationships between the different factors and
categories. For example, a particular threat might make a weakness much more significant.
Whereas a TOWS analysis will look to match internal factors to external factors to help
identify relevant strategic options that an organization could pursue. It can help an
organization to see how it can take advantage of opportunities, reduce threats, overcome
weaknesses and exploit any strengths

A TOWS is a commonly used strategic planning tool and can add real value to an
organization, helping to take strategic planning one step further. Below is an example
TOWS matrix:

Internal
Factors
Strength (S) Weaknesses (W)
External
Factors

SO Strategies WO Strategies

These strategies use strengths These strategies are

Opportunities (O) to take advantage of delineated to take advantage
opportunities of opportunities to minimize
threats

ST Strategies WT Strategies
Threats (T) These strategies use strengths These strategies are designed
to avoid threats to minimize weaknesses and
avoid threats

The big difference between a TOWS and a SWOT is the relationships between the internal
and external factors, examining how they link up, impact and influence each other.

29
Strengths to Opportunities: The S-O focuses around how you can exploit your strengths in
order to respond to the potential opportunities in the market.

Strengths to Threats: The S-T examines how strengths can be used to mitigate or remove
the threats to the business, and in some cases look at how threats can be transformed to
opportunities.

Weaknesses to Opportunities: The W-O can be the hardest consideration, as it doesn’t

always come naturally. Consider how your opportunities can remove your weaknesses.

Weaknesses to Threats: The W-T highlights how weaknesses can play into, develop or
enhance the threats of the business.

The TOWS matrix for SF&B that is developed using the SWOT analysis is given in the
following page:

30
 Internal
Factors
External
Factors
Opportunities (O)
 An Online Application
 Food Manufacturing
Factories
 Tea Processing Plants
 R&D Department
 Business Friendly Economic
and Political Conditions
 Consideration of
Sustainability and
Environment Issues
 Use of Whey Protein
 Internet of Things (IoT)
Threats (T)
 Increased Competition
 Sluggish Demand
 Shift in Consumer Tastes
 Coronavirus Pandemic
Strengths (S)
 Trending Business
 Location Flexibility
 Mixture of Age with Beauty
 Tech- savvy Employees
 Business Acumen of Owners
SO Strategies
 SF&B can design a customized 
online app with the help of its
tech- savvy employees that can
be used by customers to order
online. By doing this, they can
easily access more customers 
in short time to popularize
their unknown brand.
ST Strategies
 SF&B can set up distribution
centers in attractive market
segments with high entry and
low exit barrier by taking
advantage of location
flexibility as a startup
business.
 SF&B can run an extensive
market research to identify
and distribute the products the
demand of which are
unfulfilled in the selected
market segments.
Weaknesses (W)
 Poor Financial Foundation
 Lack of Experienced
Professionals
 Lack of Practical Experience of
Owners
 An Unknown Brand
 Conflict between Novice
Entrepreneurs and Experienced
Staffs
WO Strategies
SF&B can take loans from bank
to raise capital taking
advantage of favorable
economic condition.
SF&B can convince their
vendors to use whey protein
concentrate in formulations
when they manufacture SF&B’s
products. If the vendors are
convinced, SF&B can establish
their brand with
advertisements of whey protein
concentrate inclusion in their
products.
WT Strategies
 Initially SF&B can focus on
resource- constrained
customers and offer them
products at low price with
comparable quality. it is only
possible by reducing their
operational and distribution
costs.
 SF&B can get into a business
partnership with a local
delivery service to ensure
effective delivery.
31
 Part A

Question 3: What is the difference between strategic planning and

operational planning? How will you go through the stages of operational
planning of SF&B?

This question has been answered in the following pages (33- 35).

32
Strategic Planning: Strategic planning is the planning process carried out at the highest
management level of an organization with the aim of determining where the organization
wishes to be in the future. The focus of strategic planning is to determine the activities that
the organization should carry out to ensure that its mission, vision and objectives are
attained.

Operational Planning: Operational planning is the process used to determine the routine
activities of the business at the tactical level. The purpose of operational planning is to
design a plan that supports strategic planning to attain organizational goals and objectives.

The differences between Strategic and Operational planning:

Strategic Planning Operational Planning

Time Period Long- term plan for the next Short- term plan for one or two
three to five years years

Goal Focus Company focused Department focused

Top level leadership team is Department in- charges are

responsible for generating the responsible for creating
Plan Generation
strategic plan operational plans for their
departments

Comes from the overall strategic Comes from each department’s

Budget budget annual budget

Takes into account the internal as Takes into account only the
Business Environment well as the external environment internal environment of the
of business business

Reporting to planning committee

Reporting or executive team Reporting to departments

33
It is the middle-level management that pursues the development of operational plans.
When developing an operational plan, the immediate short-term activities that the
business needs to carry out to attain its strategic objectives are ascertained in a systematic
manner. Operational planning divides the business into different departments, business
units, divisions and centers, where planning occurs individually for every unit. Planning at
this level is consistent with strategic planning so that the overall objectives of the
organization can be attained.

The following are the features of Operational Planning:

 Objectives need to be clearly defined.

 Achievement of the desired result.

 The activities are to be performed as decided.

 Maintenance of quality standards.

 Measuring performance.

Stages of Operational Planning in SF&B:

I will go through the stages of operational planning of SF&B like this-

At first, I will recommend SF&B to break down the strategic objectives, set by the strategic
planning, into goals of different departments over the time. Then, I will recommend SF&B’s
department in- charges to break down the targets, to be achieved by his department over
the time, into five parts for the sake of operational planning. The vision says, SF&B wants to
be the 1st thought of resource- constrained customers of Bangladesh, when they need to
satisfy their hunger or quench their thirst. So, it is pointing out a specific segment of the
market in which the customers are not necessarily expecting superior products at premium
prices, instead they are looking for common food and tea products at a lower price with
comparable quality. As the 1 st focus of all startup distribution companies is attaining more
and more customers, SF&B goes along the same way. So, one- fifth of the targeted number
of customers to be attained as implied by the vision statement can be the targeted number
of customers to be attained per year. And after one year, if the number of attained
customers is not around that number, it will mandate a radical revision of SF&B’s strategic

course. That’s how the marketing department can go about meeting the objectives set by
operational planning. They can break down the yearly target into more fractions, on a

34
monthly, even a on a daily basis for their convenience. The same goes for HR department in
terms of number of employees turned into assets per year with the advantage of extensive
on-the-job-training programs and also for Financial department in terms of revenues
generated per year. In company every department is allocated by annual budget, but as it is
a startup company, owner should divide capital between department. At the end of each
short period set by the operational planning, the department in- charges will review
whether the objectives are met or not for that term and revise the operational plans
accordingly. The yearly budgets to execute the operational plans will be prepared and
reviewed by each department.

35
 Part B

Question 4 (1st Part): What is strategic intent? Considering the situation

of SF&B in Part B, please write the strategic intent of the company.

This question has been answered in the following pages (37- 38).

36
37
Strategic Intent:
In the field of management and organizational development, strategic intent is defined as a
compelling statement about where an organization is going that succinctly conveys a sense
of what that organization wants to achieve in the long term. Strategic intent answers the
question: “What exactly are we trying to accomplish?” A company exhibits strategic intent
when it relentlessly pursues an ambitious strategic objective and concentrates its full
resources and competitive actions on achieving that objective.

Strategic Intent of SF&B:

On fourteenth year after its inception and at fourth year running after the establishment of
its manufacturing plants, SF&B suddenly faces a tough competition in the form of
aggressive price cut by a rival ABCo which came into life as two newbies ACo and BCo
merged together to gain dominance in the market. Since then, the company was going in
the right direction in achieving its vision and passed three more successful years with a
high rate of growth under a five-year strategic plan since acquisition of the plants at the
10th year of its operations. SF&B started taking full advantage of a good brand image that
the company already had established. The company has its own products now and the
company decided to continue committing its resources to establish SF&B as the most
recognized and respected brand in Bangladesh. But the company was yet to have its own
Research & Development (R&D) Department.

So, as per the scenario delineated above. I recommend the following strategic intents of
SF&B:

Launch a R&D Department: That’s the very first area in which SF&B should concentrate
its resources and competitive actions. A robust R&D department will help them research on
the new technologies in developing unprecedented product lines of foods and tea. It will
also help them improve the quality of the existing food and tea products. High growth rates
since the acquisition of manufacturing plants helped SF&B earn enough revenue to finance
the establishment of a R&D department equipped with all the modern technologies,
machineries and equipment. The unprecedented product lines will help SF&B draw in more
customers than before and also will help them increase recognition and respect for their
brand.

37
Expand Business: To be the most respected and recognized brand in the country, SF&B has
to continue expansion of its business. With quality digital marketing campaigns and lively
presence in the 3 screens (Television, Personal Computers and Mobile), they can reach to
most of the market segments effectively.

Increase Product Availability: Only Expansion of business is not enough. SF&B has to
ensure that the retails stores never get out of stock of its products. Availability issues can
have a lasting impact not just on customer experience but also on a company's bottom
line. The lesson is clear: a business outage translates directly to customer outrage. SF&B
has to ensure timely distribution of its products into the retail stores. The consistent
availability of products will ensure greater brand value and recognition for SF&B.

Build Long- term Customer Relationships: SF&B should build trust with honest branding,
continuously improve its quality, never be ambiguous on its offerings and be true to the
values that drive it every day. Providing on-going value to the target market is vital to
increase brand recognition and become the well-respected “go-to” brand. 

Keep Charging Premium Prices: It may seem a little contradictory, but charging premium
prices and sticking to it can actually be used as a competitive advantage. It’s common to
assume that all buyers will be making a purchasing decision based largely on cost, but it’s
rarely the primary reason a person buys.  Buyers actually tend to be leery of prices that
seem too low. This low price sends a message about the product’s quality. Instead, standing
by premium pricing and acknowledging that its quality products are more expensive, a
company can earn credibility.

38
 Part B

Question 4 (2nd Part): What do you understand by the term strategic

inflection points? Identify and illustrate the strategic inflection point of SF&B.
What could be the strategic options for SF&B to cope with the aggressive
pricing of its rival ABCo?

This question has been answered in the following pages (40- 43).

39
Strategic Inflection Points:
When there is an order of significant change in a company’s environment that dramatically
affect its prospects and mandates radical revision of its strategic course, such occasions are
known as strategic inflection points. These are time periods of disruptive changes in an
organization’s business which call for appropriate response in addressing the situation.
Therefore, it is a decision moment.

Followings are few important characteristics of a strategic inflection point:

 This change can either mean an opportunity to rise to new heights or may signal the
beginning of the end.
 Inflection Point can generate due to action taken by a company or through action taken
by another entity having direct impact on the company.
 Inflection Point represents temporary or permanent shift in the market. Those changes
are the result of company’s response to Accelerators or Disruptors in the market.

Strategic Inflection Points of SF&B:

In order to identify the strategic inflection points of SF&B, we need ‘Scanner’ which is the
first of three components of innovation. Scanner enables the identification of disruptors or
accelerators which lead to inflection points. On fourteenth year after its inception and at
fourth year running after the establishment of its manufacturing plants, SF&B suddenly
faces a tough competition in the form of aggressive price cut by a rival ABCo. This is the
strategic inflection point of SF&B. As per definition of strategic inflection Point, it indicates
a time period. The company was going along nicely towards achieving its vision and passed
three successful years with a high rate of growth under a five-year strategic plan since
acquisition of the plants. Then suddenly two newbies ACo and BCo in the similar business,
merged together to form ABCo. This newly formed ABCo started aggressive price cutting to
gain dominance in the market. This put the company under huge pressure. Unless SF&B
comes up with a different strategy now to combat two merged companies, it will face tough
challenges. To illustrate further on the identified strategic inflection point, the change does
not mean opportunity for SF&B to rise, instead it signals to a difficult journey ahead. For
SF&B, the inflection point generated due to aggressive action taken by two opposition

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 companies. For SF&B the strategic inflection point is a case of disruptor instead of
accelerator.

Strategic Options for SF&B:

We get what we pay for’- the consumers understand this principle well.  So instead of join
racing competition of price-cutting with ABCo, SF&B should leverage its product’s
strongest assets to create value that outweighs a lower price. Reducing prices can do
more harm to SF&B than good. If it lowers them too much all on a sudden, it might risk
creating the impression that its product is cheaply made as well as priced. The focus of the
pricing strategy should be on how it can ensure customers buy from SF&B, instead of some
other company, rather than just concentrating on price.

Following are some non- pricing options SF&B might consider while responding to ABCo’s
aggressive price cutting policy:

Sell Value, not Price: Value, not price, is almost always the most critical factor in a
purchasing decision. Having a valuable product is one thing, but having the ability
to sell value is what will set SF&B apart from their competitors. In order to create value for
buyers, SF&B must understand the unique standards and expectations of its prospects.

Stay Back and Diagnose: Intelligent analysis that leads to accurate diagnosis is more than
half the cure. SF&B can run a good diagnosis analyzing four key areas:

I. Customer issues such as price sensitivity and the customer segments that may emerge if
prices change
II. Company issues such as a business’s cost structures, capabilities, and strategic
positioning
III. Competitor issues, such as a rival’s cost structures, capabilities, and strategic
positioning
IV. Contributor issues, or the other players in the industry whose self-interest or profiles
may affect the outcome of a price war

Stop the War before it Starts: There are several ways to stop a price war before it starts.
SF&B has to make sure its competitors, especially ABCo understands the rationale behind
its pricing policies. In other words, SF&B can reveal its strategic intentions. As outlined in
SF&B’s strategic plan, SF&B’s main focus is to reduce costs and keep prices within the reach
of resource- constrained customers. Price-matching policies, everyday low pricing, and
other public statements may communicate to ABCo that SF&B intends to fight a price war
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using all possible resources. But frequently these declarations about low prices, or about
not engaging in price promotions, aren’t low-price strategies at all. Such announcements
are simply a way to tell ABCo that SF&B prefers to compete on dimensions other than price.
On a second thought, SF&B can ensure that ABCo knows that its costs are low. It will
effectively warn ABCo about the potential consequences of a price war.
Compete on Quality: As now SF&B has its own manufacturing plants, it can use whey
protein concentrate in formulations of certain products to make them more nutritious. This
quality upgradation can help SF&B avert the price- cutting competition with SF&B and
stand out in the competition. SF&B can consider launching a R&B department quickly to
focus on improving quality of existing food and tea products.

Offer Completely Different Product Lines: Again, a R&D department can be the key to stay
ahead of competition. Setting up a robust R&D department, SF&B can research on
innovating new and unprecedented product lines. High growth rates since the acquisition
of manufacturing plants helped SF&B earn enough revenue to finance the establishment of
a R&D department equipped with all the modern technologies, machineries and equipment.
The unprecedented product lines will help SF&B draw in more customers than before.

Battle it out in Product Delivery: Delivery is a part of the business SF&B might excel at if it
wants to continue selling products at a higher price than ABCo. In competitive industries, a
company’s ability or failure to deliver a product or service in a timely, agreed-upon manner
can make or break a customer relationship. Timely delivery and better onboarding
experience than ABCo will help SF&B justify a higher price point.

Entice Customers with Irresistible Packaging: SF&B might improve packaging of its
products that will send a ‘Buy me’ vibe to the customers by attracting them with color,
design, and looks. Because, packaging is the first thing they interact with before shopping
for the product. But the role of packaging is more than that. It also influences their buying
decision. SF&B’s packaging should stand out and look different from similar products on
the same shelve. By making its packaging look unique, SF&B can create instant recognition
and authority within its genre, leading to higher sales and visibility.

Following are some selective pricing action SF&B might consider while responding to
ABCo’s aggressive price cutting policy:

Apply ‘Buy One Get One Free (BOGOF)’ Offer: In response to SF&B can use this offer as a
sales technique to boost its sales. When it comes to money, our brains are programmed to
see savings and value. When a customer sees a BOGOF sale, his brain will decide to
purchase it because it believes that it is good value. This way he ends up purchasing
products which he did not need or have the intention of buying in the first place. The point

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is to get the consumer to buy two items when they might have bought none, the seller is
accepting a lower margin than they might without the BOGOF. Originally the item will be
priced quite high to cover partial cost of the second item but when the offer is put on, it will
seem like a good buy. In this process, SF&B can also clear its old/seasonal/temporary/out
of-fashion stocks out of their shelves to make way for newer, high demand products with
better margin.
SF&B can also think off Product- bundling pricing e.g. a bundle of Biryani Mix, Biryani
masala and Firni mix can be sold at less price than if the items were sold separately.
Quantity discount is another option they can offer buyers as an incentive that results in a
decreased cost per unit of goods or materials when purchased in bulk.

Although direct, retaliatory price cuts should be a last resort, it is sometimes simply
impossible to avoid a price war. Clearly there are times when a company must engage in a
preemptive strike and start a price war or respond to a competitor’s discount with a
matching or deeper price cut of its own. Especially, when a competitor threatens its core
business, a retaliatory price cut can be used to signify its intention to fight long and hard.

SF&B must weigh up how much of a hit on price it can afford to take without putting its
long-term growth in jeopardy. Lowering its prices must be seen as a short-term tactic to
boost cash flow, not a long-term strategic move.

But there are several long-run implications of competing on price. Firstly, a pattern of price
cutting may teach customers to anticipate lower prices and more patient customers will
defer their purchases until the next price cut. Secondly, a price-cutting company develops a
reputation for being low-priced, and this reputation may cast doubt on the quality and
image of other products under the umbrella brand and on the quality of future products.
Thirdly, price cuts have implications for other players in the market, whose self-interest
may be harmed by lower prices.

If SF&B is forced to choose simple retaliatory price cuts as means of defense, then SF&B has
to implement it quickly and unambiguously to send a message to ABCo that its sales gains
from a price cut will be short-lived and monetarily unattractive. A slow response may
prompt competitors to make additional price cuts in the future.

SF&B also has to make sure the cuts are communicated as special offers or one-offs to help
loyal customers pass through difficult times. Because, SF&B will need to increase prices
again in the future, which could be more damaging to its long-term survival than price cuts
now.

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References:
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ec1d8f86bca8

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VIII. Strategic planning vs operational planning - definitions, explanations, differences (2020,
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IX. Rao, A. R., Bergen, M. E., & Davis, S. (2017, July 7). How to Fight a Price War?
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X. Brooks, W. 4 Strategies to Win Against Price-Cutting Competitors

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XII. What to do when a competitor cuts its prices?

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XIII. How are products sold in profit in a ‘buy one get one free’ offer?
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XIV. Ten ways to keep ahead of the competition.

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XVI. The study materials provided by my ‘Strategic Planning’ course faculty Dr. Md.
Tabarak Hussain Bhuiyan

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