Fresh Connections is a fresh food manufacturer that provides meal solutions products to retailers, restaurants and co-pack companies. After a successful stint of one year, Fresh Connections is suffering from variety of short term, operational and strategic issues. In the immediate future, cash liquidity of the company is a problem and it is recommended that take the deal with the co-op client to alleviate their financial situation. Moreover, they are in the position of high financial risk pertaining to their R&D costs and it is recommended they refine their contract policies with clients. Furthermore, Fresh Connections is suffering from a number of operational issues and it is recommended that they improve their processes to increase efficiency and eliminate waste without compromising quality. Finally, they do not have a legitimate business level strategy and it is advised that they take the company in a differentiated direction.
Porter’s 5 Forces Analysis of Fresh Connection
1. Degree of Rivalry: Competitive rivalry describes the intensity of the competition among existing firms. In the fresh food industry, the intensity of rivalry is influenced by different factors. They are :
* Price Rivalry - In this industry, big companies can substantially decrease the price and drive the volumes of industry and this can create a problem for Fresh Connections since they are a new firm and keeping prices too low will not sustain fresh connection’s business.
* Rivalry Based On Experience - The buyer is reassured when a firm is in the industry for many years. Buyers will not hesitate to give bulk orders to the big players since they know that scalability won’t be an issue for them. Quality plays an important role in this industry too. People who appreciate a product will provide a repeat business.
* Competition from Localised Industry - Many localised industry catering to different culture also creates huge competition. Each of them provides products with their own quality. They also do not provide the same kind of products. The industry is filled with firms that provide just soups, sauces or salads, or the firms that provide only entrees or side dishes or firms that are involved in the production of main dish or just desserts. These firms can have the same buyers but their product is different. . So, the industry has a large number of firms that increases rivalry because more firms are competing for the same customers.
* Geographical Rivalry: The geographic scope of competitive rivalry is mainly because of the difficulties and high cost of transporting fresh products. Manufacturers have to sell food as soon as possible because of the highly perishable nature of the products. So buyers prefer to source their products from regional firms rather than from the far away located firms.
2. Bargaining Power of Buyers: In this case buyers or the customers of fresh connections have a higher bargaining power. The two prominent buyers of fresh connections are:
* Retailers: Retailers are an important buyer of fresh products. Also they operate on very thin margins. If they get a better price from some other player in fresh food industry, they can easily switch to another competitive product in the industry.
* Restaurants: Another major buyer of fresh food industry is restaurants. For them quality of the products plays an important role. So if they are not satisfied with the quality of products being delivered to them, they can also switch to other players in the industry. Also to capture a new restaurant business, fresh connections would have to invest again in the development cost of new recipes.
SWOT ANALYSIS WITH MANAGERIAL IMPLICATIONS| Strengths * Knowledge-based Recipe Database * Diverse, High Quality, Customizable Products * Flexible, agile & responsive to customer needs * Compliance USDA Regulations * Understand the needs of Client’s...