Zorbas Bakeries Ltd.

University Degree Business and Administrative studies

School of Business Administration Cyprus College

Company’s Name: Zorbas Bakeries Ltd

School of Business Administration

Course: MK 509 Marketing

Professor: Kostas Gouliamos Ph. D

Student’s Name: George Syrimis

Student’s Number: F20041200

Company’s History:

Zorba’s Bakeries and Sons Ltd. was created at the village of Athiainou, Cyprus, at the 1st o October 1975 by Mr. Andreas Zorbas. It became a listed Company at the 22nd of November of 1979. The main activity of the Company was the production and delivery of baking products.

At the October of 1988, the customer demands “forced” the owner of the Company to take the decision, for opening his first store at Nicosia. At the year of 2000, the Company was running seven (7) shops at the wider area of Nicosia and at the same year it became public. At the 27th of December of 2000 the Company became member of the Cyprus Stock Exchange (C.S.E.).

The whole production is made at the two factories of the Company at Larnaka Industrial Area. The old one is running since 1999 and the new one since 2002. The new premises (an investment of about 6 million pounds) is employing the latest technologies and it is one of the most advance at Europe. The Company is satisfying all the International Quality Standards like ISO 9000 and HACCP (Hazard Analysis of Critical Control Points) for both Production facilities.

Nowadays, the Company is running 31 shops all over Cyprus:

Nicosia District

Larnaka District

Limassol District

Paphos District

Famaggusta District

During the last three (3) years the Company has been expanded at the “Take Away Food” market, the “pizza” market as also at the “Catering” one.

External and Internal Environment:

During the year 2000, Company’s Management team was trying to create the future strategy plan of the Company. The International Food Engineering Consultants of Denmark, (a well established Consulting Group), was asked to give their thoughts and opinions about this. Their proposal, (later had been adopted by the Company) was rising that the maximum efforts of the Company have to be concentrated at the Retail Shop Industry because of many reasons. The major one was that the competition at that market was strong but very easy to be hammered! The customers were thirsty of quality! The market futures were huge and the benefits for the Company were going to be great because of the high cash incomes that a movement like that will bring. In four (4) years, 24 new shops opened all over Cyprus. Customer’s personal satisfaction was achieved by offering the highest possible product quality all over the day, all over the year. The Company’s turn over for the year of 2003 was raised up to £19,921,000 Cypriot Pounds and for the year of 2004, a 35%-40% increase of it is objected!!

The Company is producing more than 180 different products at its premises which are satisfying the needs of all the members of a family all over the day. These products are mainly baking and confectionery ones. At each shop, the customer can find all the basic items in order to cover his food needs, from fresh milk to fresh cakes, from fresh bread to freshly roasted peanuts, and from fresh orange juice (squeezed in front of you) to cold beverages etc.

The increase of the variety of the available products and their continuous quality improvement are the main opportunities that the management team is called to cover. A well organized Research and Development department is responsible to develop new products as also new production techniques for increasing the offered product quality and for reducing the production cost. The implementations of the “frozen product” production technique for example, reduce the production cost to less than a 30% of the original; increase the customers’ satisfaction twice (because the products are offered to them freshly baked - Just in Time Production process) and enable the Company to open more stores because of the centralization of the production and because of the higher production capacity.

The European Union Legislation that the Government of Cyprus is forced to follow after the 1st of May, 2004 and the “supermarkets cartel” are the main threads that the Company has to face. The owners of the supermarket force the various members of the Parliament and the Ministry of Trade, to change the current legislation which covers the operation of the Retail Bakery Shops. With that, the purchasing power of each shop will be dropped dramatically because the Company will have to reduce the available stocks and the available variety of products. Pressure is also acted for the reduction of the opening hours of these kinds of shops. Under these circumstances and after a market research, the managing team decides to change the whole concept of each shop. The shops are going to change from “Retail Bakery Stores” that are now, to “Retail Convenience Stores”. Under this, the main objective of each store will be the offering of product availability at the best possible quality all over the day, all over the year. A “pilot shop” is already running under this concept at Platy area of Nicosia. At this shop, a bookstore, a kiosk and a mini market department are also present.

Regarding the baking competitors no real thread is present. All of them realize the superiority of Zorbas Bakeries because of the big production capacities and the low production cost. Both of them are achieved because of the implementation of the latest available technology and correct production planning. With the financial strength that the huge cash flow incomes give, the Company is able to make future investments without facing any financing problems. The main competitor realizes the financial weakness that has, compared to the Zorbas bakeries and for the last year is looking for a “strategic partner”.

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Target Market and Channel Relationships:

As Mr. Michalis Kkanios, sales development manager [1] mentions, “all the members of each family are considered as customers. All the needs and requirements of all the members of a family have to be satisfied by the best possible way. At each shop, the personnel are responsible to identify and to satisfy the needs of all the customers that are entering the shop. They have to “guide” them correctly regarding the selection of the products. The right behavior and response will make the customers to realize that the main objective of the personnel is to not to sell, but to satisfy their needs and requirements. That’s how the big sales are achieved!”

In order to be able to cover all these retail shops with all that huge amount of different products all over the day, Company had to establish a well designed Distribution System. The distribution system had to be effective in delivery right quantities of products at the right time without affecting their quality condition. With the help of a centralized Computed Aided Logistic System (developed with the valuable assistance of Planning International), the right distribution of the various products is achieved. All the shops are supplied continuously with products through the Company’s logistic center based at Larnaka. According to the needs of each shop and according to the available stock of each shop, an order is prepared and delivered to the logistic center. From there, all the necessary quantities of products are removed from the central store (a freezer store capable to store 1000 tones of products at temperatures of -25 0C, +10C) and via mobile freezers are delivered to the various shops all over the island. As Mr. Loizos Loizou, Manager of Industrial Units [2], explains: “with this sophisticated system it is ensured that even the most isolated shop at Paphos will never run out of products. Also this system ensures that product’s consumption must be achieved in three days (by the moment that the products leave the main store). This complicated process established, ensures maximum customers satisfaction through the delivery of fresh products with the highest possible quality”.

The continuous exchange of information between the various retail shops and the centralized unit establish the normal operation of all the shops and solve any raised problem immediately. The capabilities of such a system are very high; the logistic manager is able to observe the consumption of each single product at each shop at any time of the day. Mr. Loizou mentions that “we are even able to forecast and monitor our sales all over the day. This helps us a lot during the national holidays like Christmas and Eastern”.

Mr. Costas Zorbas, Company’s General Manager [3] raise that “we consider that our customers (as also our suppliers) are our friends, which they help us to increase our effectiveness and to achieve our strategic goals. We always ask their opinions about a movement that we did or we are planning to do. All the managers have to maintain an approach which makes the customers to realize that we are expecting from them to tell us their opinions and their thoughts”.

All the Brand Managers are persons well educated and well trained professionals who work to build and maintain long-term customer relationships by listening to their customers, assessing customer needs, and organizing the Company’s effort to solve customer problems. The Human Resources Department is responsible for the continuous training of all the selling personnel. All the personnel have to pass this, from the young girl behind the point of sale machine to the sales manager of the Company. For this reason, a training centre has been created since 2002.

The suppliers are as important as the customers. With the relation channels established with them the quality assurance program is achieved at its highest possible level. Each supplier must be able to deliver to the purchasing department of the Company raw materials and products of no defectiveness and of the quality that the Purchasing Department asked for. It is made clear to them, that any delays are unforgiving. Mr. Artemis Hatsitoffis, purchasing manager [4] explains that we help our suppliers to serve us correctly. We make them realize that is for their own good when we ask for them to become HACCP approved. The Research and Development Department helps the suppliers to become better and better even with know-how and technology. By this, both parties are served because the supplier becomes bigger and more reliable and because the correct supply of raw materials is established. As a result the company’s quality assurance department is making only some minor test to the various supplies because the necessary quality is quarantined.

At the other hand, Company is demanding from its various suppliers to help the Research and Development Department for the improvement of the existing products, developing of new ones, improving of the various production processes as also for the increase of productivity and reduction of the production and operational cost of the Company. All this continuous improvements are necessary not only at the production but also at the logistics, sales, maintenance and even accounting department.

At all contracts that are signed between Zorbas bakeries and the various equipment manufactures, a supplier’s obligation regarding the upgrading of the sold equipment is included.

With all the above, the Company’s continuous improvement is established and both parties are satisfied and strong relationships are achieved. A good example is the exchange of know-how and technology between Zorbas Bakeries and the Ionian Puff Pastries of Greece (one of the Greek supplier of the Company) regarding the improvements of the puff pastry production line. The result of this was the quality improvement of the products of both Companies. These strong relationships are one of the key reasons that make Zorbas Bakeries the leader of the Bakery Industry at Cyprus at quality, service, customer satisfaction and performance.

Promotional Strategy:

The Company’s whole Promotional Strategy covers the Advertising, the Sales Promotion and the Public Relationships. Is concentrated to various issues like new product presentations (like frapuchinno), new shop openings, seasonal products (like Christmas cakes for example), change of timetables of each shops as also the Brand Image Improvement through Charities, Donations, Event Sponsoring etc.

The whole strategy is covered mainly by Short Term Projects which are raised according to the various time needs as also the various events that the Company wants to raise. According to the type of each project various type of advertising media are going to be used. A new shop opening for example, will be advertised heavily through the local radio stations. Advertising messages that want to raise an event, like the presentation of a new product use mainly the outdoor advertising. Outdoor advertising is used also by strategies that they deal with Brand Image Improvement.

All promotion projects are organized well by the Marketing Department with the valuable contribution and involvement of sales, research and development as also production department.

The research team of the marketing department is currying out various studies in order to realize what the various customer’s needs are, regarding new shops and new products as also asking the opinion of them for various promotion actions that they had taken. The results of these studies are taken under serious consideration. If for example, from a study like that, it is found that a new shop is needed in order to cover a certain area, the marketing department with the involvement of the Sales Department raises the issue. Then, the shop must be found at the correct point. A shop must be at the right side of the street, (the left side of the stream that leads to the customers homes-nobody is buying bread at his way to the job), must have adequate parking places and must be of the adequate size. At the right time and after the co-operation with the financing and the production department the project is evaluated.

A research that is made in order to gain feedback from an action gives to the department valuable results. From a research like that, it was found that the heavy advertising projects (television ones) occurred at the past had positive results only initially. The public considered that Zorbas wants to eliminate all its competition to zero. Because the objective of the Company is not that, it was decided to reduce them as much as possible. Now, this kind of advertising is almost abandoned.

The method that is mainly followed now, is the Reminder one and includes sponsoring of events (like concerts, sports), donations, charities etc and small advertising spots. The main purposes are the improvement of the Brand Image and the establishment of it to the top levels. Ms. Koulla Ioannidou, Public Relation Manager [5], clears that “with the correct involvement of the Company at the various issues that people are concerned like charities and donations we achieved a lot. By helping financially a poor family or by financing a medical operation that has to be carried out abroad in order to save the soul of a child, we prove to the people and to ourselves that we do not care only about profit but about public good also”.

A new project now is under developing and is going to deal with the environment. As Mr. Costas Zorbas says, “we want prove that we are an environmental friendly organization. Our objective is to implement the electrical driven cars technology for the delivery of our products to our shop. We are going to create a fleet of environmental friendly delivery vans. We are going to become pioneers. We are the first in the world that implements a concept like that at the Baking Industry”.

Conclusions:

All the personnel of all the 56 different positions that are employed by Zorbas Bakeries, knows that the main objective of the Company, is the satisfaction of the customer needs. It is well understood by everybody that by the moment that the customer satisfaction is ensured, all of them are gaining.

With the aid of the strong relation channels that established between the Company and its customers as also those between the Company and its suppliers a strong marketing communication model is achieved. With the aid of those channels, all the necessary messages regarding the “wants” of the customers are coming back to the firm. The management team knows very well that these channels are vital for the success of the Company and that’s why are always kept active and well protected. With all that feedback signals, which are coming from all over Cyprus, its easy for the personnel of marketing department to realize what are the various needs and wants as also what are the various tendencies of the market. By this way, a continuous “updating” of products and services is a fact.

The continuous Research and Developing of new products and services and the follow up of the International market trends and standards are making the Company a pioneer at its sector.

The Public Relations which are achieved with the correct approach of the citizens maintain the Brand Image of the company at the top levels.

All the above, are vital factors which are contributing to the success of the Company.

Α. ΖΟΡΠΑΣ & ΥΙΟΙ ΔΗΜΟΣΙΑ ΛΤΔ

ΕΠΕΞΗΓΗΜΑΤΙΚΗ ΚΑΤΑΣΤΑΣΗ ΑΠΟΤΕΛΕΣΜΑΤΩΝ ΓΙΑ ΤΗΝ ΠΕΡΙΟΔΟ ΠΟΥ ΕΛΗΞΕ ΣΤΙΣ 30 ΙΟΥΝΙΟΥ 2004

Τα Αποτελέσματα δεν έχουν ελεγχθεί από τους εξωτερικούς ελεγκτές του Συγκροτήματος, και αυτά έχουν ετοιμασθεί με βάση το Παράρτημα ΣΤ Μέρος IV, Παράγραφοι 25 και 27(5) των Περί Αξιών και Χρηματιστηρίου Αξιών Κύπρου κανονισμών.

Οι λογιστικές αρχές που ακολουθήθηκαν συνάδουν με τα Διεθνή Λογιστικά Πρότυπα και είναι οι ίδιες με εκείνες που εφαρμόζονται για την ετοιμασία των ετήσιων οικονομικών καταστάσεων.

1.ΚΥΚΛΟΣ ΕΡΓΑΣΙΩΝ

Το Συγκρότημα αύξησε τον κύκλο εργασιών του κατά £3.121.643 ποσοστό 35%, από £8.885.687 το 1ο εξάμηνο του 2003 σε £12.007.330 το 1ο εξάμηνο του 2004.

Η αύξηση στον κύκλο εργασιών θεωρείται πολύ ικανοποιητική, δεδομένου ότι αυτή προήλθε κατά κύριο λόγο από αύξηση των πωλήσεων των υφισταμένων καταστημάτων του Συγκροτήματος, που ο αριθμός τους σήμερα φθάνει τα 30 καταστήματα σε όλη την Κύπρο.

2. ΜΕΙΚΤΟ ΚΕΡΔΟΣ

Το ποσοστό μεικτού κέρδους για το 1ο εξάμηνο του 2004 ήταν 39,66% σε σχέση με 40,5% το 1ο εξάμηνο του 2003, και 38,6% για ολόκληρο το έτος 2003. Οι αιτίες για τη μείωση αυτού του ποσοστού ήταν κατά κύριο λόγο η αύξηση στην τιμή των καυσίμων ,του ηλεκτρισμού, και πρώτων υλών, αλλά θετική επίπτωση στο κόστος ανά μονάδα παραγωγής συνεχίζει να έχει και η λειτουργία της νέας παραγωγικής μονάδας του Συγκροτήματος.

3. ΚΕΡΔΟΣ ΑΠΟ ΕΡΓΑΣΙΕΣ

Το κέρδος από εργασίες αυξήθηκε κατά £225.249 ή 14%, από £1.345.465 το 1ο εξάμηνο του 2003 σε £1.570.714 το 1ο εξάμηνο του 2004. Το 1ο εξάμηνο του 2004 το Συγκρότημα κατάφερε να περιορίσει την αύξηση κυρίως στα έξοδα διοίκησης και να έχει παράλληλα σημαντική αύξηση στον κύκλο εργασιών. Το κέρδος από εργασίες επηρεάστηκε από την αύξηση στην τιμή των καυσίμων και του ηλεκτρισμού, που επηρέασε και τα έξοδα διανομής και πωλήσεων. Επίσης επηρεάστηκε από την λειτουργία 2 άλλων εταιρειών του Συγκροτήματος, οι οποίες βρίσκονται στα αρχικά στάδια λειτουργίας τους.

4. ΚΕΡΔΟΣ ΠΕΡΙΟΔΟΥ ΠΡΙΝ ΤΗ ΦΟΡΟΛΟΓΙΑ

Το κέρδος έτους πριν τη φορολογία αυξήθηκε κατά £227.600 ή κατά 15%, από £1.287.257 το 1ο εξάμηνο του 2003 σε £1.514.857 το 1ο εξάμηνο του 2004.

5. ΚΕΡΔΟΣ ΠΕΡΙΟΔΟΥ ΜΕΤΑ ΤΗ ΦΟΡΟΛΟΓΙΑ

Το κέρδος έτους μετά την φορολογία και το συμφέρον μειονότητας αυξήθηκε κατά 12,8% από £1.146.106 το 1ο εξάμηνο του 2003 σε £1.314.824 το 1ο εξάμηνο του 2004 .

Η αύξηση στο κέρδος μετά τη φορολογία θεωρείται ικανοποιητική.

6. ΚΕΡΔΟΣ ΑΝΑ ΜΕΤΟΧΗ

Το κέρδος ανά μετοχή ανέρχεται σε 8,60 σεντ στις 30 Ιουνίου 2004, έναντι 7,57 σεντ στις 30 Ιουνίου 2003.

7. ΕΚΤΙΜΗΣΕΙΣ ΚΑΙ ΠΡΟΟΠΤΙΚΕΣ

Τα αποτελέσματα του 1ου εξαμήνου του 2004 θεωρούνται ικανοποιητικά για το Συγκρότημα, αν λάβουμε υπόψη, όπως αναφέρθηκε και πιο πάνω, έξοδα τα οποία έχουν αντίκτυπο στα αποτελέσματα του Συγκροτήματος είχαν αύξηση κατά το 1ο εξάμηνο του 2004. Επίσης πρέπει να ληφθεί υπόψη ότι 2 εταιρείες του Συγκροτήματος ,των οποίων τα αποτελέσματα ενοποιούνται για πρώτη φορά, βρίσκονται στα αρχικά στάδια λειτουργίας τους.

Κατά το 2ο εξάμηνο του 2004 προγραμματίζονται να λειτουργήσουν ακόμα 3 καταστήματα, κάτι το οποίο αναμένεται να επιφέρει ακόμα πιο θετικά αποτελέσματα. Οι προοπτικές για το μέλλον παρουσιάζονται ευοίωνες, εφόσον το Συγκρότημα αναμένει περαιτέρω αύξηση του κύκλου εργασιών , τόσο από το υφιστάμενο δίκτυο πωλήσεων , όσο και από τα νέα καταστήματα που θα λειτουργήσουν.

Εκτιμάται ότι, με βάση τα σημερινά δεδομένα, το 2ο εξάμηνο του 2004 θα είναι περίπου το ίδιο αποδοτικό όπως και το 1ο εξάμηνο του 2004.

References:

Mr. Michalis Kkanios, Sales Development Manager of Zorbas Bakeries Ltd. The Interview was taken on Wednesday 10th of November, 2004 at the headquarters of Zorbas Bakeries at Nicosia.
Mr. Loizos Loizou, Manager of Industrial Units of Zorbas Bakeries Ltd. The Interview was taken on Monday 8th of November, 2004 at the new factory premises of Zorbas Bakeries at Larnaka.
Mr. Costas Zorbas, General Manager of Zorbas Bakeries Ltd. The Interview was taken on Thursday 11th of November, 2004 at the headquarters of Zorbas Bakeries at Nicosia.
Mr. Artemis Hatsitoffis, Purchasing Manager of Zorbas Bakeries Ltd. The Interview was taken on Monday 8th of November, 2004 at the new factory premises of Zorbas Bakeries at Nicosia.
Ms. Koula Ioannidou, Public Relation Manager of Zorbas Bakeries Ltd. The Interview was taken on Thursday 11th of November, 2004 at the headquarters of Zorbas Bakeries at Nicosia.