Case Name: Revolution Foods: Expansion into the CPG Market

Case Name:         Revolution Foods: Expansion into the CPG Market
Company Name:    Revolution Foods

The purpose of this case is to:
•    Describe the current strategy of the organization.
•    Identify issues in the case.
•    Consider environmental sustainability issues, the values espoused by the leadership team, … as necessary.
Industry:

Industry Survey:
Type of industry (Product/Service)
NAICS code
Concentration ratio

Additional comments on the industry:
Business Functions Analysis
Management & HR
•    What is the organizational structure?
•    Describe the leadership style(s).
•    Describe the HR practices of the organization: recruitment, training, compensation practices, etc.
?    How has the leadership, culture, and decision-making style affected the organization’s ability to reach its goals?
?    How does the organization make sure that it is hiring the right people, providing the right training, compensating them appropriately, and providing advancement opportunities to ensure that the needs of the organization are served?
Marketing
•    Product or Service?
•    If product: Product, Price, Place, Promotion  (Consider whether consumer/industrial goods, durability of product,…)
•    At what stage of the product life cycle is this market? Are we dealing with a new product category or a mature and well-established one?
•    If service: what is the process of delivery? What are the qualifications of the service staff (in direct contact with customers)?
•    How large is the market for the product/service? Is it growing or shrinking?
•    What are the major forces influencing demand for this product/service?
•    Is demand of product/service consistent over time? Does the demand fluctuate sharply or in response to temporal or cyclical factors?
•    Can the organization satisfy the demand in the market?
•    Who are the competitors serving this market and what are their market shares? How and why have these shares been changing over time?
•    Are customers loyal to your product/brand?
•    How is the market for this product/service segmented?
•    What are the demographic characteristics of customers and potential customers in this market? Consider customer’s willingness to pay.
•    Are there any major customer needs or wants which are not currently being satisfied?
•    Is it difficult for customers to switch from your product to competitor’s products?
?    How closely does the product/service match the need of the market?
?    How well do the activities of the organization drive demand?
?    How well do the activities of the organization ensure that the product/service is available to the customer at the moment and location of need?
?    How would you rate the after-sales service and/or warranty services of the organization?
Collaborators and External Relationships:
•    What types of relationships exist? Duration? For what services?
•    Whose strengths best complement those of the organization?
•    How will each partner benefit from a strategic alliance?
•    What are the risks & rewards of collaboration?

Production/Operations
Value Chain

o    Primary Activities
•    Inbound Logistics
•    Operations
•    Outbound Logistics
•    Marketing and Sales
•    (After-sales)Service

o    Support Activities

o    Evaluate activities on
?    Efficiency
?    Innovation
?    Customer Responsiveness
Conclusions from Value Chain Analysis:

?    Is the organization using its assets effectively? Fully?
?    Does the organization have the right information systems in place?
?    Does the organization have appropriate ‘checks and balances’ built in?
?    Do the support activities support the primary operations of the organization?

Financial Analysis
?    Complete a thorough financial statement analysis.
Conclusions from Financial Analysis:
?    Compare the organization’s performance with that of other organizations within the industry.  Is the organization performing better/worse on key indicators?
?    Track the performance of the organization longitudinally on key ratios.  Is the organization doing better/worse/stable over time?

McKinsey 7S:
(From mindtools.com)
Strategy:
•    What is the organization’s strategy?
•    How does the organization intend to achieve objectives?
•    How does the organization deal with competitive pressure? Proactive/Reactive?
•    How are changes in customer demands dealt with?
•    How is strategy adjusted for environmental issues?
Structure:
•    How is the company/team divided?
•    What is the hierarchy?
•    How do the various departments coordinate activities?
•    How do the team members organize and align themselves?
•    Is decision making and controlling centralized or decentralized? Is this as it should be, given what we’re doing?
•    Where are the lines of communication? Explicit and implicit?
Systems:
•    What are the main systems that run the organization? Consider financial and HR systems as well as communications and document storage.
•    Where are the controls and how are they monitored and evaluated?
•    What internal rules and processes does the team use to keep on track?
Shared Values:
•    What are the core values?
•    What is the corporate/team culture?
•    How strong are the values?
•    What are the fundamental values that the company/team was built on?
Style:
•    How participative is the management/leadership style?
•    How effective is that leadership?
•    Do employees/team members tend to be competitive or cooperative?
•    Are there real teams functioning within the organization or are they just nominal groups?
Staff:
•    What positions or specializations are represented within the team?
•    What positions need to be filled?
•    Are there gaps in required competencies?
Skills:
•    What are the strongest skills represented within the company/team?
•    Are there any skills gaps?
•    What is the company/team known for doing well?
•    Do the current employees/team members have the ability to do the job?
•    How are skills monitored and assessed?
Examine where there are consistencies and inconsistencies between elements:
Shared values    Strategy    Structure    Systems    Style    Staff    Skills
Shared values
Shared values
Structure
Systems
Style
Staff
Skills

Conclusions from McKinsey 7S Analysis :
Beyond an understanding of each of the 7S,
?    Identify where the organization has strong alignment between elements.
?    What are the inconsistencies you have identified?

Resources Analysis
Resource
(this is something the organization possesses)    Is this resource valuable? Does this resource enable the company to neutralize threats and respond to opportunities?    Is this resource rare? Do competitors possess the same resource?    Is this resource mostly unimitable? Will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource?    Can something else be substituted for this resource?     To what extent is the firm organized, ready, and able to leverage the resource?
Will the resource produce competitive advantage?
Is the advantage temporary or sustainable?

Conclusions from Analysis of Resources:
?    What resources does the organization own/control?
?    Which of these resources and/or capabilities (combination of  resources) provide competitive advantage for the organization?
?    Can you identify a core competency of the organization?

Environmental Analysis:
Trends or changes identified by Category    Is the trend/change an opportunity or threat for this industry (as a whole)?
Answer “Opportunity” or “Threat”    Why Is the trend/change an opportunity or threat for this industry (as a whole)?
Is the trend/change an opportunity or threat for this firm?
Answer “Opportunity” or “Threat”    Why Is the trend/change an opportunity or threat for this firm?

POLITICAL-LEGAL
ECONOMIC
SOCIO-CULTURAL
TECHNOLOGICAL

Conclusions from environmental analysis:
?    Identify environmental trends related to this industry and organization.
?    How do these trends affect the industry?
?    How do these trends affect the organization?

Industry Analysis, using Porter’s 5F framework:
From www.extension.purdue.edu/
An affirmative answer to a question below indicates a favorable competitive environment for your industry…and your company.  Answer the questions in each section and provide your summary evaluation for the section.
How much power do suppliers have over the companies in your industry…and your company?
1.    Are there a large number of potential input suppliers?
The greater number of suppliers of the industry’s needed inputs, the more control (the companies in) the industry will have.
2.    Are the products that the industry needs to purchase ordinary?
The companies in the industry have more control when the products needed from a supplier are not unique.
3.    Do purchases of the companies in your industry represent a large portion of the supplier’s business?
If the purchases are a relatively large portion of the supplier’s business, the companies in the industry will have more power to lower costs or improve product features.
4.    Would it be difficult for suppliers to enter the industry, sell directly to customers, and become a direct competitor?
The easier it is for suppliers to start a new business in the industry, the more likely it is to happen.
5.    Is it easy to switch to substitute input products from other suppliers?
If it is relatively easy to switch to substitute products, the companies in the industry will have more negotiating room with the suppliers.
6.    Are companies in your industry well informed about the supplier’s product and market?
If the (supplier) market is complicated or hard to understand, the companies in the industry have less bargaining power with their suppliers.
Power of suppliers over industry:
Power of suppliers over company:
Explanation:
How much power do buyers have over your industry…and you?
1.    Does your industry have enough buyers that it can afford to lose some customers without jeopardizing its success?
The smaller the number of buyers, the more dependent the industry is on each one of them.
2.    Does your product represent a small expense for the customers of your industry?
If your industry’s product is a relatively large expense for the customers, the customers will expend more effort negotiating with the industry players to lower price or improve product features.
3.    Are buyers uninformed about the industry’s product and market?
If the market is complicated or hard to understand, buyers have less control.
4.    Would it be difficult for buyers to integrate backward in the supply chain, purchase a competitor, and compete directly in the industry?
The less likely a buyer will enter the industry, the more bargaining power companies in the industry have.
Power of buyers over industry:
Power of buyers over company:
Explanation:
How easy is it for businesses to enter your industry?
1.    Do you have a unique process that has been protected?
For example, if you are a technology-based company with patent protection for your research investments, you enjoy some barriers to entry.
2.    Are there high start-up costs for your industry?
The greater the capital requirements, the lower the threat of new competition.
3.    Are the assets needed to run your industry unique?
Others will be more reluctant to enter the market if the technology or equipment cannot be converted into other uses if the venture fails.
4.    Is there a process or procedure critical to your industry?
The more difficult it is to learn the business, the greater the entry barrier
5.    Will a new competitor have difficulty acquiring/obtaining needed inputs?
Current distribution channels may make it difficult for a new business to acquire/obtain inputs as readily as existing businesses.
6.    Will a new competitor have any difficulty acquiring/obtaining customers?
If current distribution channels make it difficult for a new business to acquire/obtain new customers, there will be a barrier to entry.
7.    Would it be difficult for a new entrant to have enough resources to compete efficiently?
For every product, there is a cost-efficient level of production. If challengers can’t achieve that level of production, they won’t be competitive and therefore won’t enter the industry
Threat of new entrants:
Explanation:

Are there products customers could buy instead of the products from your industry (substitutes)?
1.     Does industry product compare favorably to possible substitutes?
If another product offers more features or benefits to customers, or if their price is lower, customers may decide that the other product is a better value.
2.    Is it costly for customers to switch to another product?
When customers experience a loss of productivity if they switch to another product, the threat of substitutes is weaker.
3.    Are customers loyal to existing products?
Even if switching costs are low, customers may have allegiance to a particular brand. If customers have high brand loyalty, the industry enjoys a weak threat of substitutes.
Threat of substitutes:
Explanation:

How intense is the competition that you face in your industry?
1.    Is there a small number of competitors?
Often the greater the number of players, the more intense the rivalry. However, rivalry can occasionally be intense when one or more firms are vying for market leader positions.
2.    Is there a clear leader in your market?
Rivalry intensifies if companies have similar shares of the market, leading to a struggle for market leadership.
3.    Is your market growing?
In a growing market, firms are able to grow revenues simply because of the expanding market. In a stagnant or declining market, companies often fight intensely for a smaller and smaller market.
4.    Do you have low fixed costs?
With high fixed costs, companies must sell more products to cover these high costs.
5.    Can you store your product to sell at the best times?
High storage costs or perishable products result in a situation where firms must sell product as soon as possible, increasing rivalry among firms.
6.    Are your competitors pursuing a low growth strategy?
You will have more intense rivalries if your competitors are more aggressive. In contrast, if your competitors are following a strategy of milking profits in a mature market, you will enjoy less rivalry.
7.    Is your product unique?
Firms that produce products that are very similar will compete mostly on price, so rivalry is expected to be high.
8.    Is it easy for competitors to abandon their product?
If exit costs are high, a company may remain in business even if it is not profitable.
9.    Is it difficult for customers to switch between your product and your competitors’?
If customers can easily switch, the market will be more competitive and rivalry is expected to be high as firms vie for each customer’s business.
Competitive rivalry:
Explanation:

Conclusions from 5F Analysis:
?    What is the industry? What is the ‘status’ of the industry?
?    What is the position of the company within this industry?
?    Please conclude with a statement similar to: “In conclusion, we believe that <firm name> is in a <strong/weak/…> competitive position in the <industry name> industry (in <geographic area>)”

SWOT Analysis:
Supports achieving goals of organization    Detriment to achieving goals of organization
Attributes internal to organization
Please use the findings from your internal analyses (Value Chain, Resources analysis, etc) of the organization in this row.    STRENGTH
•    What advantages does your organization have?
•    What do you do better than anyone else?
•    What unique or lowest-cost resources can you draw upon that others can’t?
•    What do people in your market see as your strengths?
•    What factors mean that you “get the sale”?
•    What is your organization’s unique value proposition?     WEAKNESS
•    What could you improve?
•    What should you avoid?
•    What are people in your market likely to see as weaknesses?
•    What factors lose you sales?
Attributes external to organization
Please use the findings from your external analyses (PEST, Porter’s 5F) of the organization in this row.    OPPORTUNITY    THREAT

Conclusions from SWOT Analysis:
?    How do the strengths and weaknesses of the organization play off the opportunities and threats in the industry?
Defining the problem:
Now that you have completed your analysis:
?    Identify a problem(s) you will address.
?    Why did you choose to address this problem?
?    Does your analysis fully support this problem?