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Ice-Fili Analysis
Table of Contents

I- Introduction 2
II- Analysis 3
1- External Analysis 3
i) Porter’s 5 Force 3
ii) Key Success Factors 4
2- Internal Analysis 5
i) Value Chain Analysis 5
ii) Financial Analysis 6
III- Decision Opinions with Evaluation 6
IV- Recommendation and Implementation 8
1- Short Term Activities 8
2- Long Term Activities 9
V- Exhibits 10
i) Exhibit A: Financial Ratio Analysis and Calculations 10
ii) Exhibit B: Decision Matrix 11

Introduction

First time winner of the “Product of the Year” category, Ice-Fili, is the top ice cream producer in Russia. Recently, the company is experiencing tough competition by Nestlé and regional ice cream producers. Ice-Fili’s current problem is its loss in market share due to their poor quality decision-making after Russia became an open-market in 1992. Nestlé took advantage of Ice-Fili’s low reaction adjustment and is taking over their market. What should be Ice-Fili’s next move? To offer proper advice, an external and internal analysis should be conducted to analyze their environment.

Analysis

EXTERNAL ANALYSIS
An external analysis allows us to understand the ice cream industry. It includes analyzing Porter’s 5 forces and Ice-Fili’s key success factors in comparison to its competitors. Porter’s 5 Forces
1- Threat of New Entrants High
The ice cream market is attractive due to its 15% to 20% profit margin and low initial capital investment. Ingredients are acquired at low cost because of their commodity nature. Also, the final product and production process are similar among producers. Products may be easily copied making differentiation difficult to obtain. It is easy to get through customers and retailers as numerous distribution channels available. 2- Bargaining Power of Suppliers Ingredients: Low & Equipment: High Identical ingredients may be purchased from numerous suppliers. Changing supplier may be done easily with a low switching cost. However, only 10 companies can provide the necessary equipment in Russia and some equipment is highly specialized making suppliers’ bargaining power high. 3- Bargaining Power of Buyer’s High

Customers may be indifferent when buying ice cream due to the low switching cost. Also, since ice cream is an impulse purchase; consumers may just opt for another snack instead. As for retailers, ice cream is easily produced giving rise to the opportunity for a generic brand.

4- Threat of Substitute Products High
In Russia, ice cream is considered an inexpensive snack to consume “on-the-go” and may be replaced by other snacks such as soda, beer, yogurt, chocolate and confectionary candies. 5- Intensity of Rivalry Among Competitors High

Russia is Ice-Fili’s only target market. Therefore, there will be high rivalry against new entrants. Also, there are 300 ice cream producers and the industry has been experiencing a decrease of 3.5% in production increasing competition for market share. Key Success Factors

Ice-Fili has a competitive advantage due to their high quality products. They only use high-quality natural ingredients and no preservatives. Their production capacity is significantly bigger than other ice cream producers. Products are priced in the middle-level category and customers may choose from a wide range of products. Also, Ice-Fili has a good work environment and open and cooperative corporate culture. Referring to table 1, it is accurate to say that, if Ice-Fili does not step up their game, Nestlé will be the only brand in Russia in a couple of years. Table 1 | Ice-Fili | Nestlé |

Price | + | - |
Advertising | - | + |
Quality | + | - |
Variety | + | - |
Distribution Network | +/- | + |
Availability | - | + |

INTERNAL ANALYSIS
Focusing on Ice-Fili’s core competencies with the use of the value chain and its financial position will allow us to have a better knowledge of the company’s capabilities. Value Chain Analysis
Ice-Fili’s core competencies are the quality of its products and...
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