Strategic Competition and Thinking

ICE CREAM INDUSTRY

2014Presented by│Lin Shang-Hsien 林尚賢 Comenius University

Agenda1.Define Ice Cream Industry2.Brief Introduction3.Economic Characteristics4.Key Driving Forces (External-Macro)5.Recent Development(External-Macro)6.PESTLE (External-Macro)7.Main Competitors (External-Micro)8.Main Factors of Competitive Success

2014

DefineDefinition of The Industry

Dairy IndustryGrocery Stores to Specialty

Shops

Introduction2014

Statistics

40% 40% 40%

Introduction2014

Top 10Ben & Jerry's

Baskin-Robbins

Introduction2014

「第一賣冰、第二當醫生！ ?」The job which can earn the most is to sell ice cream, and the second is to become a doctor.

doctor??

Ice Cream??

Why?

Economic Characteristics 2014

Year44

46

48

50

52

54

56

58

60

Revenues of Global Ice Cream In-dustry

2008 2009 2010 2011 2012

Tota

l Rev

enue

(bill

ion) 60 Billions

70 Billions

2017 year

Big Market

Key Driving Forces 2014

Raise of Health Awareness

External

Environment│Macro

Source: Statistics offered by WTO

“Delicious” is no longer the only pursuit of ice cream in flavors

Some people can’t eat ice-cream with lactose

Key Driving Forces 2014

Increasing in Global Temperature

External

Environment│Macro

Source: GISS website statistics(departure from 1961-1990 baseline of 14.0°C, Jones et al. 1999).

Key Driving Forces

Globalization

External

Environment│Macro2014

Source: Statista website

Recent Development 2014 External

Environment│Macro

Source: Ice Cream: Global Industry Guide January 2014

Political Economical Social Technological Legislative Ecological

Country policies/ Government regulation will determine how to enter into a new country and what are the limitations.

Globalization in economy might reduce the tariff and make much easier to enter into a new country.

Raise of Health Awareness will change customers eating and buying behavior.

The Dairy Science and Food Technology (DSFT) provides consultancy services to ice cream enhancing company competence.

Labor Law in different countries will influence the cost and revenue of a company.

Global Warming will last the summer time and change the eating habits. It will also makes people become eco-friendly.

Special Tariff in different countries will influent our cost to enter into a new foreign market.

Income difference between countries will affect if we want to enter into a low-income or high-income country (Depends on the position of our product)

Location of retailing, manufacturing, and service business. All of them will affect our decision where to set up our company.

Environmental protection laws will affect the ingredients we use for ice cream in local market.

Water pollution and pollution control will affect the quality and health of ice cream products.

Life style will influent if they have the habit of eating ice cream or not.

2014PESTLE

External

Environment│Macro

2014

Main Competitors

External

Environment│MicroBen & Jerry’s ,

UnileverIce cream, Frozen yogurt, Sorbet, Ice cream novelty productsGlobal, 38 countries, franchisingTo make, distribute and sell the finest quality all natural ice cream and euphoric concoctions with a continued commitment to incorporating wholesome, natural ingredients and promoting business practices that respect the Earth and the Environment.

2014

Main Competitors

External

Environment│MicroBaskin Robbins, Dunkin’

Brands Inc. Ice cream, Frozen beverages, Ice cream cakes, Frozen treatsGlobal, 48 countries, 31 flavors, FranchisingServing ResponsiblyTo be recognized as a company that responsibly serves our guests, franchisees, employees, communities, business partners, and the interests of our planet.

2014

Main Competitors

External

Environment│MicroHäagen-Dazs,

Nestléice cream, bars, cakes, sorbet, frozen yogurtGlobal, 54 countries, FranchisingFind the purest and finest ingredients in the world and craft them into the best ice cream, sorbet, and frozen yogurt available. it is a way of doing business that is as demanding as it is uncommon.

2014

Main Factors of Competitive Success

Clear Segment and Target Market

Channels： Retail Stores & Franchising

Adapt and follow the environment change

Innovation (A number of Flavors)

Strategic Competition and Thinking

ICE CREAM INDUSTRY

2014Presented by│Lin Shang-Hsien 林尚賢 Comenius University

Agenda1.Define Ice Cream Industry2.Porter 5 Forces Analysis & factors │industry analysis

3.Strategic Group Analysis & Positioning │competitor analysis

4.Internal Analysis5.Core competencies analysis │main players6.Generic competitive strategies │main players7.Trends in this industry8.Conclusion

2014

DefineDefinition of The Industry

Dairy IndustryGrocery Stores to Specialty

Shops

2014

Porter 5 Forces Analysis & factors │industry analysis External

Environment│MicroPotential Entrants

Substitutes

Suppliers Buyers/CustomersCompetitors• High number competitors (in different sizes)• Big brands have own retail stores

(supported by mother company)• Customers can switch brands easily

• Technology & Materials are easy to acquire• The space of storage and transportation cost are high• Lack of Adequate distribution channels

• Other frozen dessert (Big companies produce all of them)

• No consequence to switch brand• Tendency to buy Low Volume• Discretion in whether or when to buy

• ICA (Ice Cream Alliance) materials

0.4

0.2

0.4

Market Share

Local Regional Company private Label Unilever, Nestle, Blue Bell

2014

Strategic Group Analysis & Positioning │competitor analysis External

Environment│MicroPrice & Quality

Numbers (Distributed Countries)

High

High

LOW

LOW

Medium

Medium

Private Labels

2014Internal analysis │main players

Internal Environment

Marketing• Clear Position : Environmentalist,

natural, eco-friendly and healthy products

• Franchise, retail, company stores• Super premium ice cream (no

artificial)

• Excellent slogan , flavors, and unique marketing strategy

• Franchise, company stores • Franchising fees are high

• Well-cognized brand name in global setting

• Finest ingredients• Super premium ice cream• Franchise, retail, company

stores

Finance• current ratio=3.59• Profit Margin=26.24%

• Current ratio=1.34• Profit margin=20.58%

• Current ratio=0.812• Profit margin=18.00%

Productio

n

• High cost of raw materials• Weak in production• Faster inventory turnover

• Cost of ingredients is high• periodic on-site inspection on

global production facilities

• employs stringent measure to storing of products so as to maintain the quality of the products

• Ice cream are produced in France and transported to Spain (main quarter of franchisee)

UnileverDunkin’ Brands Inc Nestlé

2014Internal analysis │main players

Internal Environment

R & D• Full-time R&D department• Its low-fat product production

matches the changing consumer tastes

• Innovation cost is high• Create more than 1000 flavors

until now

• Limited flavors

MIS• Provided over 1,200 hours of

computer training for employees (HRM)

• Supplier Quality management System

• Strong supply Chain management and CRM , GIS

Unilever Dunkin’ Brands Inc Nestlé

2014Core competencies analysis │main players

CoreCompetency

Difficult for imitation?Baskin Robins is known for its taste and variety. It

coordinates its marketing strategies (31 days, 31

flavors) with its production system (more

than 1000 flavors, and inspection on global

facilities) and slogan & Trade Marks.

Well-recognized brand produces super-premium ice cream (luxury and simplicity).

Position in high social-class people and use the finest ingredients with stringent

production system and other information system to control

the best quality.

Focus on Natural and eco-friendly ingredients match

the changing customers taste. Full time R&D

department catch up the trend of creating new flavors

but natural & healthy. Its inventory turnover is faster

than other competitors, which means it can sell them

to get cash as long as it’s needed.

Relevance? Breadth of application?

2014

Generic competitive strategies │main players

Generic Strategies

Siz

e o

f M

ark

et

Differentiation Cost Leadership Focus

Large

Small

T5: Focus Differentiation

Type 1: Cost Leadership—Low CostType 2: Cost Leadership—Best ValueType 3: DifferentiationType 4: Focus—Low CostType 5: Focus—Best Value

T3: Differentiation

2014

Trends in the industry

• Trends towards natural ingredients (no additive/preservative claims)• Ice-cream with lactose are refused because of suffering diabetes• More growth in diet-specific ice creams can be expected

Flavors grow up

Ice cream as a snack

Focus on Ingredients / Healthy Ice Cream

• Willing to try new flavor• Coffee is an on-trend flavor

2014

Conclusion

Although main players in this industry are in the same group of competitors (High price/quality and global level) , they create different core competencies and take different strategies according to their own business functions.

According to the basis of strategy management, strategies have to be future-oriented which means it requires consideration of both the external and internal factors influencing the firm.

In this presentation, Ben & Jerry’s and Baskin Robbins adapt the trends and follow them with its own competency. However, Häagen-Dazs doesn’t response to the changing of customers’ needs or environment obviously.

Therefore, in my opinion, in the following years, Ben and Jerry’s and Baskin Robbins will play better than Haagen-Dazs in ice cream industry.

Ice Cream

Industry

Lin Shang-Hsien

THANK YOU FOR YOUR ATTENTION &

Merry Christmas！