Corporate Strategy Assignment
Francesca Di Grezia
International Management - class 6 – Year 2010/2011
Challenges and Opportunities
We can distinguish two groups of issues that Barilla is currently facing: industry related challenges and firm specific ones. We will clarify which future opportunities we envision and further, building on the firm resources and capabilities, suggest strategic actions to follow.
1. Food industry challenges and emerging strategies
1.1 Increasing interest on healthy food. Media have been focusing the attention of the public opinion on metabolism illnesses and obesity, considered in some states as social ills. Along with raise in healthcare costs, people are thus more inclined to prefer healthy food and be more accurate in their choices at the grocery shop. The nutritional table of Barilla products should gain space on packages.
1.2 Economic crisis’ effect on the countries’ economy. Producers belonging to positive-grow countries, which weren’t affected by the crisis as much as zero-growth countries’ represent now a new threat because they are economically better off. Barilla should run an updated competitor analysis in order to avoid market myopia.
1.3 Resources’ global allocation. Food production and consumption are global scale issues and the pressure of social responsibility over production sustainability and fair consumption allocation is becoming more and more stringent. The focus of Barilla’s Food and Nutrition center could be lead to find sustainable solutions to malnutrition and under nutrition in developing countries while the company could seek for new business opportunities matching social and economic benefits.
2. Firm-specific challenges
Barilla has a strong match with the Italian gastronomy and culture. This emotional association represents an important resource, but imposes also 4 trade-offs that must be managed.
2.1 Mediterranean diet vs. local preferences in taste. Preferences in tastes derive from both environmental characteristics and cultural traditions. The use of spices and dressings differ greatly from country to country as the main kind food on which each diet is based does. If Barilla wants to provide healthy food, with nutritional values and tastes related to the Italian tradition, it has to overcome the barrier of local acceptance.
2.2 Italian eating style vs. local consumption habits. Barilla wants to bring along with its products the feeling of conviviality, of enjoying the meal as a moment of gathering, strictly related to Italian culture. The Italian three-meals diet is based on specific kinds of food and moments of consumptions. People in countries other than Italy and Europe aren’t familiar with these habits, neither in terms of ingredients nor in terms of hourly distribution of meals. Breakfast food is probably the one differing the most among countries, and represents a high barrier of entry for Barilla expansion strategy.
2.3 Market adaptation/education vs. costs. The consequences of the two previous tradeoffs can be resumed in the balance between exporting the same “food formula” all over the world (in terms of kind of food and the way is thought to be consumed), or eventually reaching some degree of adaptation to local tastes and eating habits, modifying on one hand ingredients and servings and on the other the marketing process.
2.4 Made in Italy labels vs. operational constraints. Barilla has to fight fierce competition in foreign markets against fake Italian brands, and to induce in customers’ mind the value of the real Made in Italy. At the same time, for costs and food perishability related reasons, it cannot directly export from Italy to the farthest markets thus losing the chance to label its packages, and to make the uneducated consumers associate the brand with real Italian food.
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