...5794 Strategic Management Spring 2006 Ice-Fili: Winning Strategem in a Contemporary Venue -Team 5- 900-22-7377 904-46-8228 904-47-4673 904-50-0701 904-50-7922 904-52-3718 February 13, 2006 Executive Summary Ice-Fili had been successful in the past, surviving various tumultuous times including the transformation of the Russian closed economy into an open economy and the financial crisis in 1998. As Russia’s largest domestic ice cream producer, they had held onto their market leadership for many years. However, increasing competition from foreign companies, along with the emergence of regional producers of ice cream led to Ice-Fili’s market share erosion in the recent years. Porter’s five forces model was the primary method to analyze Ice-Fili’s industry and its competitiveness in the industry. Segmentation analysis was used for further study of the ice cream industry in Russia. The analysis was carried on key variables like distribution channel, buying behavior, geographic locations, and product characteristics. Based on this model, various alternatives were considered. From these alternatives, it was possible to form a recommendation: Ice-Fili will need to focus on the strengthening of its distribution channel through various efforts including marketing and raising of capital while focusing on its long history and brand recognition. Above all, availability of its product to the consumers is the key to Ice-Fili’s success. Porters Five Forces ...
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...To survive in Russia’s ice cream industry during the 11 years since the collapse of the former Soviet Union was no small feat (see Exhibits 1 and 2 ). To be successful in these turbulent times was nothing short of amazing to industry observers. In 2002, Ice-Fili, a midsized Russian company with more than $25 million in sales, was Russia’s top ice cream producer. Surprisingly, it had outlasted several well-known international companies such as Ben & Jerry’s, which exited the Russian market in 1997, and Unilever, which left in 2001. Ice-Fili had not only successfully transitioned from the tight controls of the Soviet regime to the infant Russian open-market economy in 1992, but it had also successfully navigated its way through the difficult times of Russia’s 1998 financial crisis. Ice-Fili was fighting to maintain its market share leadership in the increasingly competitive Russian ice cream market, which had decreased over the past few years to about a half-billion dollars in sales. Nestlé, which advertised heavily, was Ice-Fili’s fiercest competitor. While most ice cream producers were left to fight in an already saturated ice cream kiosk system, Baskin & Robbins and Haagen-Dazs1 had positioned themselves as premium ice cream producers, distributing through franchised restaurant and café networks. At the other end of the competitive spectrum, the small regional ice cream producers, which were believed to have lower production costs than Ice-Fili and other Moscow-based producers...
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...Ice-Fili case analysis 1. Please provide an in-depth five forces analysis to illustrate the competitive environment for Russia’s ice cream industry. How is it likely to evolve? Five forces analysis: 1) The bargaining power of suppliers * As some producers such as Ice-Fili wanted to keep their product’s quality level, they imported specific raw materials, but they didn’t have a problem in finding new suppliers. * As the technology of Russia was lagged behind Western’s, Ice cream producers needed to import most of their ice cream machines. The bargaining power of suppliers for raw materials is low, while for facilities is high. 2) The bargaining power of customers * There are various ice creams in Russia, so customers have many choices and low loyalty to a certain kind of ice cream. * Ice cream is really appreciated in Russia, customers eat it even in Winter. The bargaining power of customers is moderate. 3) Threat of potential entrants * Barriers to entry are low, profit can be easily made (as ingredient’s cost can be moderate), facilities can be use for other items, and economies of scale can be made (as the unit cost decreases when the total production rises). * Moreover, a new producer can easily find a distribution channel, because multiple companies are willing to sell ice cream, it isn’t a monopolistic market. Threat of potential entrants is high. 4) Threat of potential substitutes * In Russia, Ice Cream is considerate...
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...Dr. Carduff Executive Summary: “Ice-Fili Case” “You cannot defeat a nation that enjoys ice cream at minus 40 celcius”- Winston Churchill. Ice-Fili has been a strong competitor in Russia’s frozen ice cream market since before the cold war. It has survived through the transition of government and privatization in 1992, and has continued to make its presence known throughout Moscow and the surrounding areas through the turn of the 21st century. However, surviving change is an everlasting battle. Recently, consumer tastes are drastically westernizing with the introduction of large refrigerators enabling households’ ability to store cartons of ice cream at home. This has allowed supermarkets to make a substantial impact in terms of ice cream market share. The change in consumer taste, combined with management issues, operating inefficiencies, and poor distribution, has placed Ice-Fili in need of strategic decision making to aid its future success. In order to combat these changes, we as consultants have devised two major strategies through financial and market analysis that we feel will help Ice-Fili to regain a strong foothold in the Russian ice cream market. These strategies have been designed to create stronger consumer demand for Ice-Fili’s 150 ice cream products, increase Ice-Fili’s distribution and marketing efficiency, and maximize sales revenues. We believe that the implementation of any or all of these strategies will result in higher profitability margins...
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...Case study 3: Competitive Advantages Ice-Fili: Ice cream market in Russia Here is a résumé of the Five forces model of the ice cream industry in Russia: Threat of new entrants High Threat of substitute High Bargaining power of supplier Low Bargaining power of customer High Rivalry among competitors High “What are the potential sources of competitive advantage in the Russian ice cream market?” How do customers buy? - Russians consume 2.5 kg of ice cream compared to the 16 kg in the USA. This is due to a different mode of consumption. Russians consume ice cream “on the go” as a snack – Spontaneous/impulsive purchase (no in-house consumption at the beginning) o Chanel of distribution Kiosk: 49% of the ice cream distribution Minimarket: 29% of the ice cream distribution o Future growth: restaurants and supermarket - Russian ice cream consumption at his top level in summer (July: index 220; October: index 70) - Single portion size – “snack” o Substitutes: beer, soda… - Raising demand for in house consumption What are customers ready to pay for? How can a company differentiate its offer? - Russian are more concerned about preservatives than fat level; traditional recipe: all natural ingredients, no preservatives - Substitutes: Beer, soda, yogurts, chocolate, confectionary candies What are the cost components (analysis for example exhibit 9)? The costs component are: - Raw materials: 42% of the total costs - Production cost: 6% of the total...
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...Ice Fili – Case Analysis Introduction Ice Fili, is historically one of Russia’s best ice cream producers, led by Chief Executive Officer Anatoliy Shamnov. After surviving being controlled by the Soviet Regime, warding off local competitors, and continuing success through the collapse of the Russian market in 1998. They have not been able to sustain steady growth of market share, and are facing increased competition from fierce rivals Nestlé. Following the time of the market collapse, they had peaked at 10.37% in 1997, and have lost more than 50% of its shares in 2002, with a recorded low of 4.3%. The industry is a very saturated one, and with increased competition from rival Nestlé, Ice Fili will need to analyze the external and internal environments, and improve their business strategy to help increase market share. Environment – PEST Political Segment The political trend that may have major implications on the strategy for Ice Fili, starts with the Association of Russian ice Cream lobbying to redefine GOST. This would set a minimum state standard for ice cream, allowing Ice Fili an opportunity to increase their market lead, because of their domestic ice cream. This would most likely have Nestlé change their operations and use fewer preservatives. Another political trend that would have implications is the change in Russian economy, to a free market enterprise, with no money implications for international companies to sell in Russia, this would hinder market share...
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...Spring 2006 Ice-Fili: Winning Strategem in a Contemporary Venue -Team 5- 900-22-7377 904-46-8228 904-47-4673 904-50-0701 904-50-7922 904-52-3718 February 13, 2006 Executive Summary Ice-Fili had been successful in the past, surviving various tumultuous times including the transformation of the Russian closed economy into an open economy and the financial crisis in 1998. As Russia’s largest domestic ice cream producer, they had held onto their market leadership for many years. However, increasing competition from foreign companies, along with the emergence of regional producers of ice cream led to Ice-Fili’s market share erosion in the recent years. Porter’s five forces model was the primary method to analyze Ice-Fili’s industry and its competitiveness in the industry. Segmentation analysis was used for further study of the ice cream industry in Russia. The analysis was carried on key variables like distribution channel, buying behavior, geographic locations, and product characteristics. Based on this model, various alternatives were considered. From these alternatives, it was possible to form a recommendation: Ice-Fili will need to focus on the strengthening of its distribution channel through various efforts including marketing and raising of capital while focusing on its long history and brand recognition. Above all, availability of its product to the consumers is the key to Ice-Fili’s success. Porters...
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...company Ice-Fili at the end of fiscal year 2002. It’s the oldest Russian ice cream producer. It originated from the former state-run Soviet company Moshladokombinat N 8. In 1992 it was privatised and registered as a private jointstock company under the name Ice-Fili. Its CEO is Anatoliy Vladimirovich Shamanov. He transitioned the company to a privatized for-profit firm after the dissolution of the Soviet Union in 1991. The transition was successful; it could hold its good market position and remains the largest Russian ice cream producer in the year 2002. All information about the company, the competitive environment and the political situation used in the following article are derived from the Harvard Business School Case Ice-Fili (Rukstad, Mattu, & Petinova, 2003). 2. External Analysis In this part it will be looked at the Russian ice cream industry. Therefore, an industry definition will be given. Its structure will be highlighted and from there on, the threats for Ice-Fili will be examined. 2.1 The Russian ice cream industry In the case of Ice-Fili we deal with the Russian ice cream industry. It concerns the production of frozen ice cream products from the raw material to the selling of the different sorts of ice. The original Russian ice cream consists only of natural ingredients. The people love its unique flavour that comes mainly from the high percentage of milk fat which makes it less sweet and more aerated than the western products. The Russian ice cream...
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...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...
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...James Short Ice-Fili Case Study ------------------------------------------------- Executive Summary Ice-Fili is the largest domestic ice cream producer in Russia that has been making delicious, traditional Russian ice cream since 1937. This historic Russian company makes its ice cream with all natural ingredients and no preservatives, unlike many other companies. Although Ice-Fili has been able to maintain their market leadership, they have been experiencing increased competition from both international and regional companies. One of the major challenges that Ice-Fili faces while trying to gain a competitive advantage is a weak distribution channel. 80% of their sales volume is sold though kiosks and mini markets. Ice cream is perceived as an “on the go” product and the buying behavior of consumers is impulsive. It is challenging for the ice cream industry to market their products as an in-home dessert. Because of this perception that ice cream has, the industry is also threatened by substitutes. Beer, sodas, yogurts, and other snacks all compete with ice cream. In addition to a weak distribution channel and a number of substitute products, Ice-Fili factories have old, obsolete equipment that produce volumes that are lower than competitors such as Nestle and Baskin Robbins. Although Ice-Fili’s production is lower than its competitors, the quality of the ice cream is very authentic. Ice-Fili uses 15% milk fat compared to 10% that gives a fluffier texture and a...
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...9-703-516 REV: SEPTEMBER 1, 2005 MICHAEL RUKSTAD SASHA MATTU ASYA PETINOVA Ice-Fili (АЙС-ФИЛИ) You cannot defeat a nation that enjoys ice cream at minus 40 Celsius. — Winston Churchill To survive in Russia’s ice cream industry during the 11 years since the collapse of the former Soviet Union was no small feat (see Exhibits 1 and 2). To be successful in these turbulent times was nothing short of amazing to industry observers. In 2002, Ice-Fili, a midsized Russian company with more than $25 million in sales, was Russia’s top ice cream producer. Surprisingly, it had outlasted several well-known international companies such as Ben & Jerry’s, which exited the Russian market in 1997, and Unilever, which left in 2001. Ice-Fili had not only successfully transitioned from the tight controls of the Soviet regime to the infant Russian open-market economy in 1992, but it had also successfully navigated its way through the difficult times of Russia’s 1998 financial crisis. Ice-Fili was fighting to maintain its market share leadership in the increasingly competitive Russian ice cream market, which had decreased over the past few years to about a half-billion dollars in sales. Nestlé, which advertised heavily, was Ice-Fili’s fiercest competitor. While most ice cream producers were left to fight in an already saturated ice cream kiosk system, Baskin & Robbins and Haagen-Dazs1 had positioned themselves as premium ice cream producers, distributing through franchised restaurant and café networks...
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...Executive Summary Ice-Fili had been successful in the past, surviving various tumultuous times including the transformation of the Russian closed economy into an open economy and the financial crisis in 1998. As Russia’s largest domestic ice cream producer, they had held onto their market leadership for many years. However, increasing competition from foreign companies, along with the emergence of regional producers of ice cream led to Ice-Fili’s market share erosion in the recent years. Porter’s five forces model was the primary method to analyze Ice-Fili’s industry and its competitiveness in the industry. Segmentation analysis was used for further study of the ice cream industry in Russia. The analysis was carried on key variables like distribution channel, buying behavior, geographic locations, and product characteristics. Based on this model, various alternatives were considered. From these alternatives, it was possible to form a recommendation: Ice-Fili will need to focus on the strengthening of its distribution channel through various efforts including marketing and raising of capital while focusing on its long history and brand recognition. Above all, availability of its product to the consumers is the key to Ice-Fili’s success. Porters Five Forces In order to analyze the industry and environment of Ice Fili, Porter’s five forces model will be used to assess its competitiveness in the market. An illustration of the model specific to Ice Fili is displayed in Exhibit...
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...winter months, we were in for a big change. We moved to Anchorage Alaska in January, right in the middle of the winter. I had never seen so much snow in my life. Because of so much snow accumulation, businesses would constantly have to use giant snowplows to remove all of the snow from the parking lots. After the plows had scraped all the snow off the top of the surface, it was not out of the ordinary for there to be a solid sheet of ice covering the parking lots. Being a new resident of the state, I underestimated at how much ice would actually be throughout the parking lot. When the parking lots were full of ice I always thought that it was the most fun thing in the world to slide across the ice on my feet. I found this fun and all, until one day it took a turn for the worst. We were at the local Wal-Mart and we had just got dumped on with four feet of snow. The snowplows were right in the middle of clearing out the parking lot so they were leaving paths of solid ice, perfect for sliding on. My mom never fancied me sliding across the ice. She would always say...
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...and how people are treating our planet. One of the facts that really caught my attention was that the water cycle is never broken – there is always the same amount of water on Earth. I never really thought about it that way, but as soon as I heard the narrator say that, I thought about all the cycles in life that happen every single day. The narrator then goes to mention that every species on Earth has a role to play. This also caught my attention Overall I found the film to be very factual as well. I thought about the facts of how our Earth is going downhill over time and it really makes me want to do something about it. I learned that global warming is really taking a large toll on our precious Earth. One example of this is the arctic ice cap is melting. It has lost 40% of its mass in the last 30 years. Another example of how the Earth is at risk is how by 2050, a quarter of the Earth’s species are going to be threatened with extinction. This frightens me and really makes me wonder what we as humans are doing wrong to affect our Earth this way. It frightens me that 70% of the Earth’s population lives in poverty. It frightens me that since 1950, the Earth’s population has nearly tripled. What are we going to do when those who lack basic necessities run out? Are those who live in poverty going to die off? When is this destruction of our Home going to...
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...How and why do Glaciers move? Glaciers are large masses of ice that are continuously changing and may be perceived as an open system with inputs and outputs. They take up 10% of the world’s total land area and are usually found in Polar Regions like Antarctica and Greenland and places where there are high altitudes and low latitudes. Fresh falling snow is made up of tiny ice crystals and after it lands it changes into solid ice. Newly fallen snow is light and porous, but as the snow becomes buried by more snow, the snowflakes change into granular ice called firn. As time passes the firn gets buried further causing the weight above it to compress it into solid ice. The force of gravity and the pressure of the ice cause the glacier to move downhill. The ice mass will stay stationary until it reaches a certain amount of thickness and when the ice reaches this amount of thickness, the pressure becomes great enough to cause the glacier to deform and move. The ice will move away from where there is the most pressure (thickest part of the glacier). Glaciers can retreat or advance depending on the amount of snow accumulation and ablation that occurs from year to year. If accumulation exceeds ablation, then the mass of the glacier will increase which causes the glacier to advance. If the snout moves to an area of lower latitude ablation will increase and eventually equilibrium will be re-established. Retreating and advancing of glaciers are very slow processes and takes hundreds...
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