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Business Strategy ABC Biscuit Manufactories (Pvt.) Ltd
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Assignment Brief
The purpose of this report is undertake a detailed environmental analysis of the ABC Biscuit
Manufactories (Pvt.) Ltd and identify its strengths weaknesses and core competencies which will
help them to derive the future strategies to be undertaken in order to gain a competitive
advantage over its competitors.
And also report directs to develop possible strategic options for the company and select most
possible strategy after go through in-depth analysis using various analytical tools.
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Acknowledgement
This would not have become a success without the contribution of many. And I make this the opportunity
to thank all of them who gave the support.
I would like to extend my sincere gratitude to………………………… for his guidance and constant
supervision in completing the project.
Also I like to express my special gratitude and thanks to industry persons for giving me such attention and
time by providing necessary information regarding the project.
My thanks and appreciations also go to my colleague in developing the project and people who have
willingly helped me out with their abilities.
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Executive summary
Strategic Management is critical subject area in today world of work. Environment is highly
changing and there should be mechanism to identify those changes and address those changes
effectively. Organizations have to incur huge cost in implementing various strategies and
therefore it requires proper theoretical knowledge to manage it.
This report will describe how to manage strategy in various stages defined as developing
alternatives, selection, implementation and evaluation and control.
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Table of Contents
Assignment Brief ............................................................................................................................ 1
Acknowledgement .......................................................................................................................... 2
Executive summary ......................................................................................................................... 3
List of Tables & Figures ................................................................................................................. 6
Introduction ..................................................................................................................................... 7
Part .A ............................................................................................ Error! Bookmark not defined.
01. Internal and External Environmental Audit .......................................................................... 8
a. PESTEL Analysis ................................................................................................................ 8
b. Porter’s five forces analysis on the industry ...................................................................... 10
c. Internal Resources and Competencies Audit ..................................................................... 11
d. Stakeholder analysis .......................................................................................................... 13
e. SWOT analysis .................................................................................................................. 14
02. Current strategic position of the selected organization ........................................................... 15
Part B ............................................................................................................................................ 16
01. Possible strategic choices .................................................................................................... 16
a. Generic strategy analysis ................................................................................................... 16
b. Ansoff Matrix analysis ...................................................................................................... 17
c. BCG matrix ........................................................................................................................ 18
d. Expansion Method Matrix ................................................................................................. 18
02. Strategic Option Evaluation Test ............................................................................................ 20
Part C ............................................................................................................................................ 21
01. Strategic Plan....................................................................................................................... 21
a. Context of business strategy of ABCn Biscuit Manufactories (Pvt.) Ltd .......................... 21
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b. Summary of the organizations Strategic Position .............................................................. 21
c. Summary of the strategic options available ....................................................................... 21
d. Strategic resources and core competencies needed to pursue the strategy ........................ 22
e. key Performance Indicators (KPIs) using the Balance Score Card ................................... 22
f. A brief monitoring and Controlling Plan Milestones and Time Scales ............................. 23
Part D ............................................................................................................................................ 24
01. Strategy Implementation in large scale organization .......................................................... 24
References ..................................................................................................................................... 25
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List of Tables & Figures
Figure 1- SWOT analysis.............................................................................................................. 15
Figure 2 - Generic strategy analysis .............................................................................................. 16
Figure 3 - Ansoff Matrix analysis ................................................................................................. 17
Figure 4 - BCG matrix .................................................................................................................. 18
Figure 5 - Strategic Option Evaluation Test ................................................................................. 20
Market Table 1 - Expansion Method Matrix ................................................................................ 19
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Introduction
ABC biscuit manufactories (Pvt) Ltd is a medium scale biscuit manufacturing company which
was established thirty years ago as the pioneer of biscuit manufacturing industry in Sri Lanka.
Mr. Gamage Hinniappuhami was the founder of the company. ABC biscuits popularized among
Sri Lankans as its unique taste. In 1960 company established a site in Rathmalana including a
new factory which consists with semi-automatic manufacturing process. ABC involved in
exporting biscuits in the mid-sixties and competed internationally with its product quality.
(ABCn 2014/15)
Vision of the company is “to be the most successful and respected food company in Sri Lanka”
and its mission is “to win the Hearts and Minds of Consumers by delivering food propositions
with exceptional quality, safety & value whilst being environmentally & socially responsible,
creating employee satisfaction and returning optimum value to stakeholders” (ABC biscuit.com)
ABC biscuits known as a more reliable and appreciated brand in Sri Lanka and other countries.
Range of products such as crackers, cookies and wafers are producing by the company and
distribute through distribution channels established island wide. ABCn is performing not only in
locally but also globally by exporting products to more than 35 countries across five continents.
ABCn has recognized by local and international quality certifications in several occasions. (ABC
2014/15)
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Part. A
01. Internal and External Environmental Audit
Strategic analysis is essential to an organization in order to identify current strategic position of
the organization as critical success and failure factors will influence on current and future
strategic performance of organization.
SWOT Analysis for ABC Biscuit Manufactories (Pvt.) Ltd
Opportunities and threats can be related to PESTEL factors and five forces analysis in order to carry out
in depth analysis when analyzing the external environment.
a. PESTEL Analysis
Political
After the end of the war north and eastern provinces of the country have opened for economic activities. It
has favorably effect on expanding ABCn’s distribution channels to those areas. As well as it is able to
establish production facilities at low labor and land cost in northern areas. ABCn as a company related to
SME sector, obtains number of benefits from the government as described in government’s policy. Fiscal
incentives such as tax relieves are available as well as government authorities such as SMEDSU and other
institutes involve in providing technical, administrative and financial support for those companies.
(Brewer, Brewer & Hawksley, 2000)
But sometimes ABCn face to rivalry from foreign substitute product because of the weakness of import
policies of government. Now a days signs of political instability can be seen in Sri Lanka. It will badly
affect to decision making of the company. Trade barriers to SAARC and NAFTA countries are also affect
unfavorably.
Economic
Economic growth of Sri Lanka has declined into 6.4% in 2015 from previous 7.8% in 2014. Deduction of
growth rate is unfavorable for food manufacturing industry in Sri Lanka. As a result of reducing the value
of rupee exchange rate fluctuation is inevitable. This will badly affect to increase the cost of raw material
and export losses as a result. As well as changes of oil prices in world market will result to fluctuations of
transport and distribution cost.
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Social
ABCn has been established strong brand recognition in local market with its high contribution to
excellent quality control and food hygiene. There is increasing consumer attention on natural or
organically produced food products. And also there is an increasing demand for sugar free cream cracker
or diet biscuits. Most of the ABCn biscuit products targeted on kids and young people. But there is
increasing trend of aging population. So a major part of the Sri Lankan market consists with aging
population. As well as infant industry is also emerging and profitable segment to be served. So company
should concern on those emerging market trends when producing.
Lifestyle of young people is evolving and food consumption style also changing as a result. As well as
there are differences in official and unofficial use of biscuits. When developing strategic plans company
should concerns on those factors too.
Technological
Technological environment a rapidly changing environment and ABCn have to adapt with those changes
before its competitors to win the market. When comparing with other leading biscuit manufacturers
ABCn shows slow reaction in applying modern technology for their production system. Company has
applied ERP system with SAP technology to provide world class technology to effectively perform
production and processes such as procurement and sales. Most of the customers have get used to prefer
the direct marketing. So online marketing should be taken in to consideration.
Environmental
Production and other processes of the company should not create hazards on environment. Factories of
ABCn biscuit manufacturing established in highly residential area such as Rathmalana. So environment
can be harmed by land, water or sound pollution. ABCn is performing in complying with ISO 14000 and
implement 3R concept in waste management but other environmental has been imposed by environmental
authorities. Now there is a trend towards green packaging as an environmental factor.
Legal
There are number of legal requirements related to SME s as well as, ISO and SLS standard requirements
related to products such as HACCP, Halal. Now there are environmental regulations on packaging of
products as most biscuits come to market wrapped with polythene packages. In addition to that there are
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export restrictions for some other countries imposed by the government. Food Act No 26 of 1980 and
consumer affairs authority act
b. Porter’s five forces analysis on the industry
Bargaining power of suppliers
ABCn highly deals with international suppliers and comparatively purchase small amount as a percentage
of total supplies to the world. Power of suppliers remains in high level for some ingredients as a result.
For an example chocolate import from Ghana, Lemon oil from UK. But for some other ingredients
company keeps power to influence on suppliers.
Bargaining power of customers
When considering as individuals bargaining power related to customers low. Because one customer can-
not influence on ABCn. But when the company moves on B2B context whole sellers and retailers such as
supermarkets and groceries can influence on ABCn as those customers purchase large amount of product.
(Brewer, Brewer & Hawksley, 2000)
Threat of new entrants
When considering the Sri Lankan context it is difficult to establish a biscuit manufacturing company as it
requires investing large amount of capital. But when considering the international context there is
potential to start companies in Sri Lanka through direct investment, merging, acquisitions and joint
ventures.
Threat of substitutes
There are number of substitutes for ABCn biscuit products such as snacks, chocolate etc. But company
can overcome the threat from substitutes by adding value and creating value proposition for offerings.
Competition amongst rivalry
There is a huge competition among rivals in biscuit manufacturing industry. Close competitor to the
ABCn is Munchee and other competitors are Maam, Brittannia, Horlics and Kist.
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c. Internal Resources and Competencies Audit
Internal resources of a company represent what a firm has to work with, its assets including its people and
the value of its brand name. Resources represent inputs into a firm’s production process. (Barney,1991)
Tangible resources
Physical
Biscuit manufacturing factory building in Rathmalana
Warehouse consist with double deep racking system
Expensive, high quality raw material
Wide range of products
Technology
Full automated biscuit manufacturing line
ERP system with SAP technology
World-class infrastructure, which includes the most modern machinery and equipment
Integrated Management System which includes Quality Management System,
Environmental Management System and Food Safety Management System
continuous R & D processes
Intangible resources
Reputational
Trust and confidence placed on ABCn brand
Super Brand status award- rated the top biscuit manufacturer
Human resource
General manager who specialized as a food technologist and chartered chemist
Skilled and motivated workforce which consist with 1400 employees
Company’s Own nutrition panel
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Projects focused on employee skills development, local and international training
Employee commitment and loyalty backed by supportiveness, positive attitudes,
tirelessness and willingness.
Wide distribution network- country wide10000 retail outlets
knowledge management
Competencies
Corporate Management
Strategic control
MIS
Speed and responsiveness through rapid information transfer
R&D
Development of innovative quality new products
Manufacturing
Efficient volume manufacturing
Production facility’s capacity to manufacture 25000 metric tons of biscuits per day
Ability to store 928 pallet positions
Marketing
Brand management
Build wide brand recognition locally and internationally
Quality reputation
High quality and taste
Responsiveness to market trends- Customer focused production
Expanding product range and continuing to cater to all our customers
Sales distribution & Service
Efficiency and speed of distribution
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d. Stakeholder analysis
Customers
Customers represent retail, wholesale and individual customers in mass market of Sri Lanka and
customers in other 32 countries. They require information such as new products introduced by
the company, discounts at purchasing and other detail on product’s quality and safety. Customers
are important for a company as they need to adapt with customer requirements in order to sustain
in the industry. Companies should carry out in depth analysis of customers when developing new
product or enter in to new market. (Brewer, Brewer & Hawksley, 2000)
Marketing intermediaries
In local distribution distributers are sales agents and whole sellers. But in export trade
distributers are import agents. Middlemen support company to find customers and make
convenient to purchase. They create proper link in between manufacturer and final customer
Suppliers
They are the people who supply raw material and they are critical to the company. Quality and
cost of final product depends on supplier. And also they support to smooth production function.
Prima Agro food and Serandib floor are some of the suppliers of ABCn.
Competitors
There are competitors such as Munchee, Luckyland, Maaam, Britannia and Kist. ABCn need to
be alert on performance and should try to put extra step than them.
Financiers
Individual, institutions or authorities who fund for the organization are important and it is
nessacery to have strong communication with them.
Public
This category includes media and citizen. Media is important to carry out promotional activities.
And also needs of public should be addressed by CSR activities.
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e. SWOT analysis
Strengths
Visionary leadership
Diversified product range
Family structure
Low & medium price ranges for products
CNCI achiever gold award winner for
operational excellence
World-class infrastructure, modern automated
machinery and equipment
Skilled and motivated workforce
Teamwork and commitment as components of
internal culture
Large pool of customers spread in island
wide locally and 32 other countries
Consumer focused strategy
High quality products
Strong brand recognition
Strong supplier base with quality raw material
Widely spread distribution network
zero breakdown concept
Increasing labor productivity
ISO 22000 certification that relates to food
safety management system.
Recognized by SLITAD people development
gold award
R&D Capabilities
Weaknesses
"Third Generation Jinx" of family
businesses
Comparatively lack of innovations
Comparatively lack of promotional activities
Lack of technology up gradation
Dependence on retailers and grocery stores
Low profit margins of some products
Unavailability of cost and energy saving
approaches
Dependence on single suppliers for essential
raw material.
Unavailability of energy saving approaches
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Opportunities
Low land and labor cost in northern area of
the country
Fiscal incentives including tax relieves
Administrative, technical and financial
support from authorities related to SMEs
increasing consumer attention on natural or
organically produced food products
increasing demand for sugar free cream
cracker or diet biscuits
increasing trend of aging population
Comparatively profitable and emerging infant
industry
Online marketing
Threats
Rivalry from foreign substitutes
Trade barriers to SAARC and NAFTA
Signs of political instability in Sri Lanka
Fluctuation of exchange rates and export
losses
Changes of raw material prices
Deduction of economic growth rate
Increase in transport, distribution and
production cost
Threat from local competitors
Figure 1- SWOT analysis
02. Current strategic position of the selected organization Major strategy that has adopted by the company is high volume and high quality but low profit
margin strategy. So the company is producing for the mass market at low price with the blessing
of economies of scale by capturing large portion of market over the rivals. Company invests
more capital on acquiring new production plants in order to supply for increasing demand.
Quality and consistency takes a major part of its strategy. For an example: ABCn Lemon puff
has the same taste for years, Cream Cracker also differ from rivals crackers from its freshness.
Company highly concern on sustain the quality of existing products rather than go for
innovations. But Market share of the ABCn decreased steadily since 2002. Munchee considered
as the leader of the Biscuit manufacturing industry as it has captured more than half of the
market share. All the company’s products finish with flexible packing materials. So the company
has concerned on creating some backward integrations with those package manufacturers. Task
of distribution of products has totally outsourced by the company. Sales agencies and other
wholesale and retail sellers involve in distributing products. In value creation to the customers
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ABCn is maintaining international level quality while keeping affordable price to the local
customers. (Thompson and Martin, 2010)
In order to achieve the ABCn’s vision to be the most successful and respected food company in
Sri Lanka, ABCn has to continuously drive towards innovations to give superior value to
customers while developing strategies to overcome competition When considering the ABCn
group, it follows diversification strategy. But ABCn biscuit manufactories Ltd alter to the
business unit level of the group. As a business unit it follows differentiation strategy.
Part B
01. Possible strategic choices
a. Generic strategy analysis
According to the Michael Porter’s generic competitive strategy Metrics following strategies
options to enhance its competitive position by delivering customer value and gaining and
retaining competitive advantage.
Porter’s Generic competitive strategy Matrix
ABCn is performing in here as company has
differentiated most of the biscuits considering
the income levels of customers.
Figure 2 - Generic strategy analysis
Company has strategic options such as,
Cost-leadership strategy- Provide low cost, low differentiated product to the mass market
Differentiation strategy- Provide differentiated products to the mass market
Low cost focus strategy- provide low cost product to a specific market segment (niche)
Broad
Market
Cost
Leadership
Differentiation
Narrow
Market
Cost focused Focused
Differentiation
Low cost Differentiation
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Focused differentiation strategy- Provide differentiated product to a specific market
segment
Low cost differentiation strategy- provide low cost differentiated product to the mass
market
Cost focused differentiation strategy-Provide low cost differentiated product to a niche
b. Ansoff Matrix analysis
According to this matrix ABCn is able to select one or few of following strategies.
Products
Markets
Figure 3 - Ansoff Matrix analysis
Market Penetration-Maintain or increase current market share with existing products
Market development- Company seeks new markets for its current products
Product development- Launch of new products to existing Market
Diversification-make new products for new markets
Existing New
Existing
Market Penetration
Product Development
New
Market Development
Diversification
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c. BCG matrix
This analysis consists with product portfolio analysis.
Relative market share
Market Growth rate
Figure 4 - BCG matrix
Cracker volume market share
Munchee-71%
ABCn- 28%
Biscuit market growth 2000-2014
2000 2014
Munchee 23% 55%
ABCn 69% 23%
Others 8% 22%
Source: The Neilson retail audit
When considering BCG matrix ABCn is in the position of “cash cows” in the matrix. It means
there is relatively high market share but no growth. Though there is high amount of profit for the
company. Invest in low amount
d. Expansion Method Matrix
This matrix can be used to identify the organization’s internal and external expansion
opportunities and its geographical spread of activity. It expresses market opportunities associated
with strategy options.
High Low
High Star Question Mark
Low Cash cow Dogs
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Company
Market
Table 1 - Expansion Method Matrix
ABCn is performing internationally by exporting products. But it has more options to expand the
business.
Considering above four analyses can come up with following strategic options available for
ABCn Biscuit Manufactories (Pvt.) Ltd.
Diversification strategy with focused differentiation strategy
In here mainly concern addressing the needs of infant segment which has not still addressed by
the ABCn and to differentiate according to income of the niche.
New product development strategy with focused differentiation strategy
This strategy concern on develop new biscuit which have medicinal value to the (diabetic or
blood pressure) diseased market segment while differentiating on income.
Overseas market expansion strategy through overseas manufacturing
This strategy concern on establishing a production plant overseas in order to increase the market
share
Inside Outside
Home
country
Internal development Merge
Acquire
Joint venture
Alliance
Franchise
International Exporting
Overseas office
Overseas manufacture
Multinational operations
Merge
Acquire
Joint Venture
Alliance
Franchise
Licensing
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02. Strategic Option Evaluation Test
There is several strategy evaluation and selection frameworks such as SAFe model, TOWS
matrix, Grand Strategy selection Matrix and Decision tree analysis. But in here Grand strategy
selection method apply for evaluate above three strategies. (Thompson and Martin, 2010)
Rapid Market Growth
Weak competitive position Strong competitive position
Slow market growth
Figure 5 - Strategic Option Evaluation Test
Product and market
development
Product development
Concentrated growth strategy
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Part C
01. Strategic Plan
a. Context of business strategy of ABCn Biscuit Manufactories (Pvt.) Ltd
As a company which has faced to high competition of industry leader business strategy of
the organization need to be improved to overcome rivalry and to get large market share.
b. Summary of the organizations Strategic Position
Providing high quality differentiated product to the mass market keeping low profit
margin. (Brewer, Brewer & Hawksley, 2000)
c. Summary of the strategic options available
Diversification strategy with focused differentiation strategy (Product and market
development strategy)
New product development strategy with focused differentiation strategy (Product
development strategy)
Overseas market expansion strategy through overseas manufacturing (concentrated
growth strategy)
Best possible strategy
When comparing two possible strategies according to the grand strategy analysis those
are product and development strategy and concentrated growth strategy. But when
considering the financial situation of the company it is not much strong to go for overseas
market expansion. Because of that product and market development strategy is the best
possible strategy to achieve rapid market growth while maintaining strong competitive
position.
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d. Strategic resources and core competencies needed to pursue the strategy
Improved R&D facilities
It is need to have in depth market research to identify customer requirements and to come
up with most appropriate mixture of production
Manufacturing flexibility
Flexible machinery will ease new product development
Quality raw material supplier
It determines the ultimate quality of the product. When launch the product in to new
market it should free from complaints
Quality reputation and Brand management
Customers can be capture easily by through brand recognition
Efficiency and speed of distribution
New product should be available everywhere of island wide.
Appropriate promotional mix
This is critical to aware customers about the new product
e. key Performance Indicators (KPIs) using the Balance Score Card
Customer perspective
KPI s- Time take to meet customer needs from receiving order
Number of customer complaints about quality of the product
Internal Business perspective
KPI s- Efficiency of business processes
Innovation and learning perspective
KPI s- Time taken to develop new product
Percentage of revenue comes from new product
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Staff attitudes regarding new product
Number of employee suggestions acted upon
Financial perspective
KPI s- Profitability of customers
Return on investment
Market value added
f. A brief monitoring and Controlling Plan Milestones and Time Scales
Initiation and planning
Strategic audit
Reevaluate opportunities and threats……………………………………….1week
Reevaluate the strategic resources and core competencies…………………1 week
Analyze critical strategic factors……………………………………………1 week
Reevaluate current strategic mindset……………………………………… 1 week
Strategic Audit report……………………………………………………… Milestone
Execution
Balance scorecard
Build the revenue strategy and productivity strategy……………………….2 weeks
Identification of targeted customer segment and their value proposition…. 1 month
Process focused view of the business……………………………………….2 Months
Asses the intangible assets nessacery to drive performance……………… 1week
Report on Balance scorecard………………………………………………. Milestone
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Closure
Financial performance analysis……………………………………………. 2 weeks
Report on financial performance………………………………………….. Milestone
Part D
01. Strategy Implementation in large scale organization
1. Selected large scale organization- Haleys group
Roles and responsibilities for strategy implementation exists within the Haleys group
Management committee members of the Hayleys group are responsible for the strategic
planning, development and implementation.
Responsibilities of Hayleys group management committee members
Recruitment, Remuneration and discipline all personnel
Training and succession planning
Financial planning and performance reviewing
Maintenance of ethical standards
Safeguarding assets and avoiding deterioration of value through obsolescence
Providing support in achieving group objectives and standards
(Source: Hayleys annual report, 2014/15)
2. Commercial Bank PLC
Board of directors of the bank is responsible for business strategy implementation.
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Responsibilities
Setting the criteria required for the post of managing director and key management
personnel
Succession arrangement for retiring directors
Securing the integrity of information
Managing risks and implementing effective internal control system
Compliance with ethical standards
Ensure interests of all stakeholders
Commercial Bank of Ceylon (Annual report 2010)
Both organizations have similar responsibilities in strategy implementation.
References
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improvement in a college of business”, The Mid‐Atlantic Journal of Business, Vol. 36 Nos 2/3,
pp. 123 - 127
Gunn, R. and Williams, W. (2007), “Strategic tools: an empirical investigation into strategy in
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Introduction to Management, 2015, Strategic Management: Formulation and Implementation.
[ONLINE] Available at: http://www.introduction-to-management.24xls.com/. [Accessed 09 July
15].
Management Study Guide, 2015, Strategic Management - Meaning and Important Concepts,
[ONLINE] Available at: http://www.managementstudyguide.com/strategic-management.htm.
[Accessed 08 July 15].
ABCn 2014/15, ABCn biscuit manufactories (Pvt) Ltd, Annual Report 2014, viewed 7 July 2015
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Ruocco, P. and Proctor, T. (1994), “Strategic planning in practice”, Marketing Intelligence &
Planning, Vol. 12 No. 9, pp. 24 - 9
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Journal
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