This assessment task involves critically analysing a case study that will be uploaded on the Moodle by Week 3 and due in week 6. This is an individual assessment task and students must use relevant theories in the Unit to complete the analysis.
Business Plan and Challenges
The purpose of the following report is to review a business case study of Mormor Magda’s ice cream and their performance in Swedish ice cream industry (Fundedbyme.com, 2019). As their business journey was not smooth and full of difficulties, this report will discuss organisational issues and try to provide recommendations to mitigate existing and future challenges.
Angela Hafstrom decides to start an ice cream business being driven by the fact that Sweden lacks innovation when it comes to making ice cream. During her paternal leave for the third child she felt reluctant to find a new job further and decided to start planning on her business idea of producing ice cream which can compete with international brands (Nenycz?Thiel and Romaniuk 2014). Although, Angela had planning yet she did not have prior experience of entrepreneurship. Therefore, she started with marketing the idea through setting up a blog about her life. Consequently, she gained popularity as well. After that she decided to do market research from collecting feedback from food store owners and retail chains.
After the preliminary investment she started off with establishing first ice cream factory in a small town with a handful of employees. Due to good marketing and offered quality all of their products sold out within two days and it created problems as they were running on low workforce. With the recruitment of new employees, investment increased. In this due course, no product diversification had been performed. Due to lack of innovation, company experienced loss. Then, with the help of few friends and sibling, Angela explored wide entrepreneurship ideas and innovative recipes as well to compete with existing rivals and sustain within industry.
This study has covered from the areas of setting a new business plan to support the idea and implement it in reality. Not only setting up a business but nurturing it for future profitability and sustainability is the key to gain long term success. With the help of established entrepreneur friends and family members Angela has got through complications of competition. Simultaneously, as stated in Urde, Baumgarth and Merrilees, (2013), the need of innovation, branding and investment according to the business demand has been understood in this due course.
Angela was young in business industry. She was trusting on her intuitions and whatever little help she received from her brother was enough to operate her business at initial level. However, as the time progresses she realized the difficulty of understanding investment calculations in different sectors of business. Consequently, a board of directors were formed to resolve such issues with the help of her brother, one of his friends. A web designer and art director were recruited from their familiar circle to make the base of web marketing strong considering it as the most cost effective way of campaigning. As stated in Topcu (2015), like most of the aspiring small ice cream chains across the country, they recovered the struggle with the competitors yet to maintain a sustainable business Mormor Magda is facing challenges due to shifted customer preferences.
Need for Innovation, Branding, and Investment
Consumer behaviour towards ice cream has changed over the years. People used to prefer good quality ingredients to be involved into their favourite frozen dessert. However, according to the industry trends as described in Malik, Willett and Hu (2013), ice cream has been considered unhealthy and sinful dessert that is restricting young generation from having it. Rather, fitness freak people would like to have Greek yogurt and fruit based frozen dishes. According to Agarwal et al. (2015), the market is demanding healthy alternatives of diary products which must gluten free or sugar free. It can be made of soya milk for vegans, which eventually makes it healthier. As stated in Augustin et al (2013), use of caramel, chocolates and heavy dairy are some of the products people have started to avoid intentionally to adapt healthier lifestyle choices. Therefore, Mormor Magda needs to work on product diversification to produce a new range of healthier alternatives in order to sustain competitive advantage.
Rather than following strict methodology, it would be highly effective if Angela choose to develop a culture of consistent innovation within her company. As she was free spirited and learnt business following her experiences, it would not be wrong to develop a corporate culture which encourages employees’ creative ideas and innovative behaviour too. Following a strict methodology can be predictive and strategies can be easily imitated too. This strategy of internal practice of innovation is unique and confidential. This culture has been developed as feasible as possible according to the company resources and capabilities. Gradually, the management look up to the processes for betterment if they can amend it or change it thoroughly.
It must be used when it comes to address changing customer behaviour in case of choosing healthier diet (Håkansson 2015). Every business must look up to the ways which are appropriate for their company profile but make sure not to imitate from other implementations. It is a process which will help Angela to understand her people’s capability, measure resources and culture creative ideas to treat existing adaptation struggle. In this course, competitors’ analysis will help the company to recognise future issues apart from product diversity.
As a small business firm there is huge change of facing high bargaining power of suppliers. Therefore, they must develop trustworthy relationship with at least five to seven suppliers if they want to switch between them in a situation of price hike.
Buyers’ power is high as they have launched themselves newly in market. With great marketing comes popularity and curiosity. With affordable price range Mormor Magda is running on high buying power of consumers.
Threat of new entrants
Threat from new ice cream business is comparatively low in a saturated ice cream industry and even if new company enters it would take as long as Magda is taking unless they are coming from highly experienced entrepreneurship background.
There are so many companies; specially branded ones are experimenting with healthy alternatives (Mead et al. 2013).
Swedish ice cream industry is highly dominated by leading ice cream brands. As described in Faccio et al. (2013), big brands have more understanding in areas of investment, advanced logistics management knowledge and experienced employees unlike small businesses have.
Although, local entries can be handled yet foreign entrants must be handled with care as they can easily occupy most of the market share exploiting the brand name. Therefore, marketing game should be strong sharing news of new ventures and offerings.
To avoid the threat of substitution detail market research is necessary to understand core market need and preferences to innovate and create products.
Being a small firm innovation is the way to set a standard of exception.
As understood from the case along with above analysis, Swedish ice cream industry has been dominated by large ice cream businesses which are good at handling operations in terms of doing right amount of investment and far more strong that Mormor Magda in terms of employee experience. In order to sustain combatting the high competition and dynamic consumers interest the company needs to maintain a strong marketing communication through various tools like campaigning, promotions, developing public relations and many more. Products must be invented following the interest of the consumers. Moreover, to ensure growth of an established product marketing activities must be appropriate and product differentiation is needed to sustain the growth of a certain product. Maturity stage of a product is when it can face highest competition. Moreover, to adapt with the changed customers’ preference they can conduct survey to get the instant feedback and practice the culture of innovation accordingly. It will be helpful to address faulty areas of human resource department as well. With efficient marketing, research and employee development the trending criteria can be explored and customers can be satisfied too in this course.
Agarwal, S., Beausire, R.L., Patel, S. and Patel, H., 2015. Innovative uses of milk protein concentrates in product development. Journal of food science, 80(S1), pp.A23-A29.
Augustin, M.A., Udabage, P., Juliano, P. and Clarke, P.T., 2013. Towards a more sustainable dairy industry: Integration across the farm–factory interface and the dairy factory of the future. International Dairy Journal, 31(1), pp.2-11.
Faccio, M., Ferrari, E., Persona, A. and Vecchiato, P., 2013. Lean distribution principles to food logistics: a product category approach. International Journal of Operational Research, 16(2), pp.214-240.
Fundedbyme.com (2019). Mormor Magdas Glass / Mormor Magdas Ice Cream. [online] FundedByMe. Available at: https://www.fundedbyme.com/campaign/5367/mormor-magda-ice-cream/ [Accessed 8 Jan. 2019].
Håkansson, A., 2015. Has it become increasingly expensive to follow a nutritious diet? Insights from a new price index for nutritious diets in Sweden 1980–2012. Food & nutrition research, 59(1), p.26932.
Malik, V.S., Willett, W.C. and Hu, F.B., 2013. Global obesity: trends, risk factors and policy implications. Nature Reviews Endocrinology, 9(1), p.13.
Mead, E.L., Gittelsohn, J., Roache, C., Corriveau, A. and Sharma, S., 2013. A community-based, environmental chronic disease prevention intervention to improve healthy eating psychosocial factors and behaviors in indigenous populations in the Canadian Arctic. Health Education & Behavior, 40(5), pp.592-602.
Nenycz?Thiel, M. and Romaniuk, J., 2014. The real difference between consumers' perceptions of private labels and national brands. Journal of Consumer Behaviour, 13(4), pp.262-269.
Topcu, Y., 2015. Turkish consumer decisions affecting ice cream consumption. Italian Journal of Food Science, 27(1), pp.29-39.
Urde, M., Baumgarth, C. and Merrilees, B., 2013. Brand orientation and market orientation—From alternatives to synergy. Journal of Business Research, 66(1), pp.13-20.
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