Kudler Fine Foods Strategic

Management

Kudler Find Foods Strategic Management

Moid Mohammed
University of Phoenix

Kudler Fine Foods Strategic

Management

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Kudler Fine Foods Strategic Management

Kudler Fine Foods (KFF) is a one-stop shop for gourmet cooking, providing the
finest selections of bakery, meat and sea food, produce, cheese and dairy, and wine.
Founded in 1998, KFF currently has three stores, located in La Jolla, Del Mar and
Encinitas. The success of KFF comes from the passion and experience of its founder,
Kathy Kudler, who understands the delicacies of gourmet cooking and believes in
providing the shopping convenience to customers at reasonable prices. KFF is expanding
its business by introducing new services such as catering service, and reengineering its
supply chain by contracting with organic growers. This presents an opportunity for KFF
to review its current information technology systems and explore new ways to improve
its operational efficiency. The business strategy has to be developed by doing a SWOT
(Strengths, Weakness, Opportunities and Threats) analysis. Since strategic management
is a dynamic process, organizations have to adapt to the changing business conditions to
remain competitive in the market.
Information systems can revolutionize the operations of a business. Organizations
use strategic information systems to seize the opportunities created by technological
developments, and to increase competitiveness in changing market conditions. Strategic
systems can have an outward focus such as addressing issues related to competition,
supply, and customers, and an inward focus such as increasing employee productivity,
improving teamwork, and enhancing communication. Information technology contributes
to strategic systems by creating applications, supporting strategic changes such as
reengineering, providing technological innovations, and collecting information for
competitive intelligence (Turban, Rainer, & Potter, 2003). KFF could use information

Kudler Fine Foods Strategic

Management

technology to establish a high speed communication network amongst its stores, provide
internet access to customers for order booking and tracking, and provide access to
suppliers about inventory levels. When providing information to customers and suppliers,
KFF should carefully review the access level so it doesnt disclose propriety information
or data that could help competitors. KFF could use the following information technology
that is relevant to retail business (Capgemini, 2008):

Point-of-Sale (POS): POS systems are the equivalent of an electronic cash register.
They provide faster checkout times and better customer service. Through use of
networking software, the checkout counters can be tied to the stores inventory
database.

Workforce Management: Workforce Management solutions include forecasting, labor

scheduling, time and attendance, task management and employee profile. Webenabled applications provide exciting opportunities for retailers to optimize store
staff.

Retail Media Networks (RMNs): RMNs distribute content, including paid

advertising, instructional content, shopper navigation and news, through a network of
digital devices within a store. This integrated set of media and display solutions offers
consumers an interactive, self-service and rich-media applications that can impact
their purchase behavior in real-time.

Inventory management: Radio Frequency Identification (RFID) technology offers an

opportunity to improve inventory management in the store. Anti-theft prevention and
source tagging are popular features of RFID.

Kudler Fine Foods Strategic

Management

Global Data Synchronization (GDS): GDS facilitates collaboration between retailers

and manufacturers through the adoption of common trading standards. Complying
with the agreed standards can generate supply chain savings and productivity
improvements for both retailers and product manufactures.
Strategic management involves the major decisions, business choices, and actions

that chart the long-term course of an enterprise. A companys strategy guides the
management decisions and the use of organizational resources to establish and sustain
competitive advantage. The success or failure of a business organization is often a result
of its strategy (Gomez-Mejia & Balkin, 2002).
Porters model provides a framework of competitive forces that play a crucial role
in the company strategy. According to the Porters model, the five major competitive
forces are: the threat of entry of new competitors, the bargaining power of suppliers, the
bargaining power of customers, the threat of substitute products or services and the
rivalry among existing firms in the industry. Porter highlighted three common strategies
to deal with competitive forces: cost leadership strategy, differentiation strategy and focus
strategy (Turban, Rainer and Potter, 2003). Organizations develop a strategy using the
SWOT analysis, which identifies the strengths, weakness, opportunities and threats facing
the organization. Most organizations give top priority to strategies that match strengths
with opportunities and second priority to strategies that match weaknesses with threats.
The key is to exploit opportunities in areas of organizational strength and to defend
against threats in areas of organizational weakness (Gomez-Mejia & Balkin, 2002, pp
158).

Kudler Fine Foods Strategic

Management

KFFs generic strategy is to increase revenue by introducing new services and

promoting customer loyalty, and to reduce cost by increasing operational efficiency
(University of Phoenix, 2004). KFF has used a combination of cost leadership,
differentiation and focus strategy to achieve its business objectives. KFFs strategy is
executed by controlling the quality of products and services, providing outstanding
customer service, providing specialty products and services, and improving operational
efficiency. As a TQM (total quality management) initiative, KFF has hired a university
student, who will spend time at the three stores and provide recommendations for the
next business plan.
Tactics mean short-term actions that support or facilitate achieving the long-range
strategic objectives. An organizations tactics are the specific actions, sequences of
actions, and schedules that are used to fulfill the strategy (Reh, 2008). KFFs decision to
contract with organic growers is a tactical move to facilitate KFFs strategy of high
customer satisfaction by providing fresh organic product, and cost leadership by
obtaining products at lower price. KFFs customers are mostly affluent people with
refined taste, whose main concern is the quality. While lower cost of organic products
will help KFF increase profit margins, KFFs focus should be on improving quality of the
organic products.
KFF will benefit by promoting customer loyalty programs to retain its current
customers. According to (Turban, Rainer, & Potter, 2003), obtaining a new customer is
five to six times more difficult and expensive than retaining an existing one. By offering
incentive programs to frequent customers, KFF can encourage loyal customers to enjoy

Kudler Fine Foods Strategic

Management

gourmet food at a discounted price. This will result in increasing the sales and reducing
advertising cost, which will eventually help in higher profits for KFF.
KFF needs a centralized inventory system that is tied to the checkout counters.
This initiative will support the cost leadership strategy through effective inventory
management. The integration of information is required for timely decision making with
regard to customer promotions and empowering suppliers for faster delivery. Efficient
operations through use of information technology will act as a barrier to new competitors,
who may not be able to invest in such systems.
The catering service will differentiate KFF as a one-stop shop for gourmet
cooking from raw ingredients to cooked food. With a diversified business in retail and
catering, KFF will be better positioned to deal with new competition or a downturn in one
business area. The catering service offers an excellent channel to reach out to new
customers for its gourmet stores. Guests at the parties often ask about the caterers and
KFF can use this opportunity to invite them to the in-store parties. KFFs catering service
department will act as a customer of the KFF store, resulting in high sale of the store
products.
For a business strategy to be successful, a firm must be flexible and make
changes to the strategic plan based on experience (Gomez-Mejia & Balkin, 2002, pp
157). All profitable businesses will soon attract competition that may directly or
indirectly influence their future. Firms have to continually scan and analyze the
environmental factors, and modify or reformulate the strategy to stay ahead of the
competition. Kudler has to adopt the technological advancements in order to improve
operational efficiency and develop an infrastructure that is scalable with its anticipated

Kudler Fine Foods Strategic

Management

growth. The demand for organic food is growing as customers consider them to be
healthier, better tasting, and environmental friendly (Baourakis, 2004). KFF will have to
identify emerging trends in customer demand based on formal surveys and informal
feedback from customers, and make decisions on its product line. KFF should continue to
monitor the products and prices of other gourmet stores, so that their prices remain
competitive in the market. A periodic trend analysis of the fine food grocer industry will
provide KFF the information to take intelligent business decisions, and forecast KFF's
future sales more accurately.
KFFs mission is to provide its customers with the finest in selected foodstuffs,
wines, and related needs in an unparalleled consumer environment (University of
Phoenix. (2004). KFFs business strategy is to increase revenue through high quality
products and customer satisfaction, and reduce cost by improving operational efficiency.
The strategic goals can be achieved by adopting information technological advancements
and developing an infrastructure thats scalable with the KFFs anticipated growth. KFF
will have to continuously scan the environment to identify factors that could affect its
business and develop tactical plans to sustain competitive advantage. As Charles Darwin
said, it is not the strongest, nor the most intelligent who survive, but the one who is most
adaptive to change.

Kudler Fine Foods Strategic

Management

References:
Baourakis, George (2004). Marketing Trends for Organic Food in the 21st Century.
World Scientific.
Capgemini. (2008). Store Technology/Extended Retail Solutions. Retrieved from
http://www.capgemini.com/industries/retail/solutions/store_tech
Gomez-Mejia, Luis R., and Balkin, David B. (2002). Management (8th ed.). New York:
The McGraw-Hill Companies.
Reh, F. John, (2008) Vision, Strategy and Tactics. About.com. The New York Times
Company. Retrieved from
http://management.about.com/cs/adminaccounting/a/vst_2.htm
Turban, E., Rainer, K.R., and Potter, R.E., (2003). Introduction to Information
Technology (2nd ed.). New York: John Wiley and Sons, Inc.
University of Phoenix. (2004). Kudler Fine Foods. Retrieved October 29, 2008, from
University of Phoenix, rEsource Simulation, MBA502-Managing the Business
Enterprise Web site.