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Information systems report

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Introduction

REPORT FOR THE DIRECTORS OF WHOLESOME DRINKS LTD. TO: SPIKE JONES, JEMMA SHARRATT FROM: RYAN BEBBINGTON, DATE: 25/4/08 RE: STRATEGY ANALYSIS Terms of Reference: This report provides an analysis of the smoothie industry in which Wholesome Drinks Limited operates, and to give a critical evaluation of the strategic plans that they have proposed. A). Analysis of the smoothie industry. 1. Power of Buyers 1.1 Current Position Supermarkets now account for 60%1 of Wholesome Drinks Limited's' (WD),well-known chains of sandwich shops, coffee bars and motorway service stations make up the majority of their revenue which again means that a lot of power lies with few large buyers. The small independent retailers have little power and account for little of the revenue. The buyers are generally limited in power however because WD ltd. are the only business producing 100% pure fruit smoothies that are free of preservatives and additives, therefore there are no exact substitutes. 1.2 Future Strategy 1.2.1 Chain of WD juice bars This vertical forward integration would reduce the power of buyers, as the Juice bars are guaranteed buyers WD will rely less on other buyers. ...read more.

Middle

3.2.3 Entering Europe There are no major companies in the European fruit smoothie market, suggesting little competitive rivalry. However, it is inevitable that other producers would also enter the market and rivalry would be fierce to obtain the greatest market share. B). Evaluation of Wholesome Drinks Proposed Strategic Plans 1. Developing a chain of Juice bars 1.1 Suitability The first plan that will be discussed is to open a new style of "Juice bars" across UK high streets. This plan also meets the current trend in the UK market where there is a large growth in sales of health foods, instance UK sales of smoothies have doubled from 2005 to 2007 (�23.75m to �46.1m)4. They will also have a guaranteed buyer for their production company. It will also develop brand familiarity. The main reasons against this plan is that by opening stores in UK high streets, they will be directly competing against the established health food shops and coffee shops, that originally stocked their drinks. They may lose these retailers as customers if they begin to directly compete with them. 1.2 Acceptability This plan should be acceptable to Jemma and Spike as it is a good way of stimulating a large amount of growth in the business. ...read more.

Conclusion

There is also a language barrier between the countries. There is an exchange rate risk they must consider, as stock and sales value will vary. There will be an increased risk of wastage as the products will be in transit for longer. 3.3 Feasibility This plan may not be feasible as it is a new market, which the firm currently has no information on. The brand is unknown in Europe, so there will need to be a large advertising budget to increase awareness. And they will need to develop a new distribution network, and maybe build a bigger factory if production capacity is exceeded. 4. Conclusions Before WD decides which of these strategies to undertake they must first perform the appropriate market research and sales forecasts, to give full information. However it is recommended, that expanding the product range is the most feasible plan. As it builds on WD's already successful strengths and key competences, whilst the other two plans will require outside expertise as WD moves into new markets. WD will be supplying the growing demand that exists for healthy and organic produce. It is a gradual step for growth that will not leave the company overwhelmed. ...read more.

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