This assignment is based on the Collins Snack Cake case in Ghemawat and Rivkin’s paper “Creating Competitive Advantage” from Session 7. It is adapted to reflect COVID-19 and the provision of nutritious mini-meals to home workers. You should (re)read the entire paper before doing this assignment!
Pizzas are made from flour, yeast, oil, water, tomatoes, spices, flavors, sugar, cheese, and preservatives. Pizzas are baked in high-capacity ovens that can only be used for high temperature pizzas and yeast-bread meals. They are sold to supermarkets and convenience stores for quick consumption as afternoon or evening snacks, and are particularly important for people who can’t get to pizzerias during COVID. Similar to the initial facts of the snack cake case presented by Ghemewat and Rivkin, Collino’s market share has dropped from 45% to 25% over five years, while Betoli’s has grown from 1% to 20% as can be derived from the data in the table below that presents annual revenue for each competitor.
Annual Revenue (CAD$ million)
Year 1 Year 2 Year 3 Year 4 Year 5 (now)
Collino’s 45 46 41 40 35
Betoli’s 1 3 11 20 28
Saviola’s 25 26 27 27 28
Oregano’s 20 22 26 29 35
Others (several) 9 11 13 12 14
Total 100 108 118 128 140
Customers rate Betoli’s highest on Price; Oregano’s rated highest on Brand Image and Variety, Saviola’s rated highest on Freshness, while Collino’s was not rated first on any dimension of customer need.
1) What can you conclude about industry structure (i.e., the Five Forces)? Focus on your most important conclusions – completeness is not required, but support your points with data and facts! (12 points)
Supplier Power
Buyer Power
Industry Rivalry
Threat of New Entrants
Substitutes
Overall
2) From the five year average data below, (a) draw a relative cost diagram below reflecting the major cost items for the four main industry players, and (b) compute and label the industry average (simple, not weighted average) price and cost per unit, using these four main players as a proxy for the entire industry. (8 points)
3) On the Competitive Positioning grid below, indicate the likely strategy (source of competitive advantage) for Collino’s, Betoli’s, Saviola’s and Oregano’s. (Write their names in the relevant location) (4 points)
4) Describe the strategic issue facing Collino’s, with facts from above to support your answer. (4 Points)
5) You were just named CEO of Collino’s and have to devise a strategy to increase profitability.
a. Which competitive position would you pursue? (2 point)
b. Which one of the three main competitors would you challenge? (2 point)
c. What is your logic for the answers to (a) and (b)? Cite relevant data from the Annual Revenue table (Page 1) and the Cost table (Question 2) (4 points)
d. Why did you not choose the other two options (your rationale for ruling them out)? (4 points)
6) Recall that a successful strategy implies a fit among the activities a firm performs. For each of the functional areas below, suggest at least one way in which Collino’s would need to improve on their current activities if they are to pursue your recommended strategy: (10 points)
• R&D and Product Development
• Sourcing/Inbound logistics
• Manufacturing
• Marketing & Advertising
• Distribution/Outbound logistics