- 30 Marks
CSME – May 2023 – L1 – SA – Q1 – Strategic Implementation
Strategies for market expansion, sustainable advantage, and industry environment for a medium-scale food processing firm.
Question
Oyinbo Industries Limited is a medium-scale enterprise involved in the processing and packaging of local (traditional) food items for the Nigerian market. Its product portfolio includes Instant Elubo Powder, Instant Pounded Yam Powder, and Instant Beans Powder, all of which have been successful in the Nigerian market. The company hopes to expand its market coverage to the United States, United Kingdom, France, Canada, and the United Arab Emirates, which are believed to be viable new markets for the products.
To achieve these goals, the company plans to strengthen its position in the Nigerian market, focusing on increasing market share, sales growth, and profitability. Recently, it expanded its product range by introducing Instant Plantain Powder, Instant Soya Beans Powder, and Garri Ijebu. The table below shows current market and sales growth for each product:
*Products introduced into the market in 2021
The company’s current market growth rate for each product is over 10%, largely due to population growth and concerns about food hygiene in open markets. Oyinbo Industries seeks to leverage this opportunity to become a leader in processed and packaged foods in Nigeria.
However, competitors are mainly cottage industries and small-scale producers who, despite limited resources, control substantial market share. These firms primarily depend on small rural farmers for raw materials, which are abundant but lack regulation.
As part of its growth plan, Oyinbo Industries intends to secure a raw material supply by acquiring farmland in Kwara State. It also aims to collaborate with a local fabricator for its processing equipment. In the next phase, the firm plans to leverage its distribution network and internal capabilities to expand market share in Nigeria and increase sales of new products. However, challenges such as frequent power outages and equipment breakdowns remain.
Required:
- (a) Advise on strategies for each product that align with the company’s strategic direction using Ansoff Growth Vector Analysis. (13 Marks)
- (b) Explain how to achieve sustainable competitive advantage using Michael Porter’s Six Principles. (6 Marks)
- (c) Describe key business environment elements using the PESTEL framework. (6 Marks)
- (d) Identify the type of integration strategy being pursued and discuss potential drawbacks. (5 Marks)
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