Individual case 2 STG MGT

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Laurentian University *

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STRATEGIC

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Management

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Feb 20, 2024

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Strategic Management Individual Case Study Analysis #2 Date of Submission: Feb 6, 2024 Submitted To Steve Stephen J. Havlovic, Ph.D Submitted By Molla Tashrif Hossain Student ID: 0428601

I. Strategic Profile Blue Apron, a key player in the meal-kit delivery industry, faces challenges stemming from financial instability, fluctuating customer engagement metrics, and intense competition. The company's historical financial performance indicates significant revenue fluctuations and persistent losses, necessitating a reassessment of cost structures and revenue streams for sustainable profitability. Customer engagement metrics reveal fluctuations in orders and customers, highlighting the need for enhanced marketing strategies and customer retention initiatives to drive revenue growth. Competitive pressures from rivals like HelloFresh and EveryPlate necessitate Blue Apron to differentiate its offerings and capitalize on emerging market opportunities. Blue Apron must address financial challenges, optimize operational performance, and differentiate its offerings to achieve long-term success in the evolving meal-kit delivery landscape. The analysis will focus on identifying strategic initiatives to overcome these challenges and capitalize on emerging market opportunities. II. Situation Analysis A. General environmental analysis Technological Trends Technological trends in the meal-kit delivery industry are evolving rapidly, with advancements in automation and logistics technology enhancing operational efficiency and customer experience. Blue Apron must embrace technology to optimize its supply chain, improve delivery times, and enhance order customization capabilities to remain competitive. Demographic Trends Demographic trends indicate shifting consumer preferences towards healthier and convenient meal options, driving demand for meal-kit delivery services. Blue Apron can capitalize on this trend by expanding its product offerings to cater to diverse dietary preferences and lifestyle choices. 2 Molla Tashrif Hossain, ID: 0428601

Economic Trends Economic trends such as fluctuations in disposable income and unemployment rates can impact consumer spending on discretionary items like meal kits (Grant, 2019) . Blue Apron needs to monitor economic indicators closely and adjust pricing strategies and promotional activities to remain affordable and attractive to consumers during economic downturns. Political/Legal Trends Political and legal trends, including food safety regulations and labor laws, can influence Blue Apron's operations and cost structures. Compliance with regulatory requirements and proactive engagement with policymakers are essential to mitigate legal risks and maintain business continuity (Volberda et al., 2023). Sociocultural Trends Sociocultural trends emphasize health consciousness, sustainability, and convenience in food choices. Blue Apron can align its marketing messages and product offerings with these cultural shifts to resonate with its target audience and differentiate itself from competitors. Global Trends Global trends such as globalization and international trade agreements can open up new market opportunities for Blue Apron to expand its operations globally. Strategic partnerships and market entry strategies tailored to specific cultural and regulatory environments will be critical for successful international expansion. Physical Environment Trends Physical environment trends, including climate change and environmental sustainability concerns, are shaping consumer attitudes towards food production and distribution. Blue Apron should prioritize sustainability initiatives and environmentally friendly practices throughout its supply chain to meet evolving consumer expectations and regulatory requirements. B. Industry analysis Threat of New Entrants: The threat of new entrants into Blue Apron's industry, the meal-kit delivery sector, is moderate to high. While the industry is relatively young and entry barriers 3 Molla Tashrif Hossain, ID: 0428601

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such as establishing supplier relationships and distribution networks are not prohibitive, significant capital investment and brand recognition are necessary to compete effectively (Porter, 2008) . Established players like Blue Apron benefit from economies of scale and brand loyalty, making it challenging for new entrants to gain market share. However, the industry's growth potential and evolving consumer preferences continue to attract new entrants, increasing competitive pressure. Bargaining Power of Suppliers: The bargaining power of suppliers in the meal-kit delivery industry, including farmers and food processors, is moderate to high. Suppliers wield significant power to negotiate prices and terms due to the perishable nature of food products and the importance of quality and freshness to customers. Blue Apron and other meal-kit companies must maintain strong supplier relationships and diversify their supplier base to mitigate supplier power and ensure a reliable and cost-effective supply chain. Bargaining Power of Buyers: The bargaining power of buyers, represented by Blue Apron's customers, is moderate. While customers have various options and can switch between providers based on factors like price, quality, and service, they often value the convenience and personalized meal options offered by meal-kit companies. Threat of Substitutes: The threat of substitutes in the meal-kit delivery industry is moderate. Traditional grocery shopping and restaurant dining serve as primary substitutes for meal-kit services. However, Blue Apron differentiates itself by offering convenience, meal variety, and portion control, which traditional alternatives may lack. Competitive Rivalry: Competitive rivalry in the meal-kit delivery industry, including Blue Apron's market, is high. The industry is characterized by intense competition among major players like Blue Apron, HelloFresh, and Home Chef, as well as smaller niche players. Price competition, product differentiation, and marketing efforts drive rivalry among competitors. C. Competitor analysis Blue Apron operates in the meal-kit delivery industry, facing competition from various players offering similar services. Competitors like HelloFresh, EveryPlate, and Freshly represent significant challenges in the market (Ghemawat, 2007) . 4 Molla Tashrif Hossain, ID: 0428601

Current Strategies and Strategic Intent: HelloFresh focuses on providing high-quality meal kits with diverse recipes, catering to different dietary needs. EveryPlate emphasizes affordability, offering simple yet delicious meal options at a lower price point. Freshly positions itself as a provider of convenient, chef-prepared meals that require minimal preparation. Strategic Mission: HelloFresh aims to become the leading global provider of meal kits by offering innovative recipes and superior customer service. EveryPlate seeks to make home cooking accessible to everyone by providing affordable meal solutions. Freshly strives to revolutionize the way people eat by offering convenient, nutritious meals that fit into busy lifestyles. Capabilities and Core Competencies: HelloFresh leverages its vast recipe database and efficient supply chain to ensure freshness and variety in its meal offerings. EveryPlate excels in cost-effective meal planning and distribution, allowing it to reach a broad customer base. Freshly's core competency lies in its ability to deliver ready-to-eat meals that meet specific dietary preferences and health goals. Competitive Response Profile: Competitors may respond to Blue Apron's initiatives by enhancing their meal variety, improving delivery logistics, or investing in customer engagement strategies (Barney & Hesterly, 2015) . They may also explore partnerships with food suppliers or expand their market reach through targeted marketing campaigns. D. Internal analysis Blue Apron's internal analysis using the value chain model illuminates the primary activities and support functions that contribute to its competitive advantage in the meal-kit delivery industry. Primary Activities: Inbound Logistics: Blue Apron's procurement strategies ensure the timely and efficient sourcing of fresh ingredients from trusted suppliers. Its partnerships with farms and food processors guarantee high-quality inputs for meal preparation. 5 Molla Tashrif Hossain, ID: 0428601

Operations: Blue Apron's culinary experts design recipes and meal kits that emphasize freshness, flavor, and variety. The company's state-of-the-art facilities and production processes enable efficient meal preparation and packaging, maintaining product integrity. Outbound Logistics: Blue Apron's distribution network ensures timely delivery of meal kits to customers' doorsteps. Its logistics operations prioritize freshness and sustainability, leveraging advanced tracking systems to optimize delivery routes. Marketing and Sales: Blue Apron employs targeted marketing campaigns and partnerships to attract and retain customers (Johnson et al., 2019). Its online platform and mobile app provide seamless ordering experiences, personalized recommendations, and subscription management tools. Service: Blue Apron's customer service initiatives focus on enhancing the overall user experience. Its responsive customer support team addresses inquiries, resolves issues promptly, and gathers feedback to improve service quality. Support Activities: Procurement: Blue Apron's strategic sourcing practices secure competitive pricing and reliable supply chains for ingredients and packaging materials. Technology Development: Blue Apron invests in technology to streamline operations, optimize inventory management, and enhance customer engagement through data analytics and personalization algorithms (Chen et al., 2018). Human Resource Management: Blue Apron prioritizes employee training and development to foster a culture of innovation, teamwork, and excellence in culinary craftsmanship. Infrastructure: Blue Apron's infrastructure investments include facilities, equipment, and information systems that support its operational efficiency, scalability, and sustainability goals. III. Identification of Environmental Opportunities and Threats and Firm Strengths and Weaknesses (SWOT Analysis) Strengths: 6 Molla Tashrif Hossain, ID: 0428601

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Brand Recognition: Blue Apron enjoys strong brand recognition in the meal-kit delivery industry, known for its high-quality ingredients and innovative recipes. Customer Loyalty: The company has a loyal customer base attracted by its convenience, variety, and subscription-based model, contributing to recurring revenue streams. Operational Efficiency: Blue Apron's streamlined operations and supply chain management enable cost-effective procurement, production, and distribution of meal kits. Technology Integration: Blue Apron leverages technology to enhance customer experiences, personalize recommendations, and optimize logistics and inventory management. Weaknesses: High Marketing Costs: Blue Apron incurs significant expenses in customer acquisition and retention due to intense competition and the need for continuous marketing efforts. Limited Geographic Reach: The company's delivery services are restricted to certain regions, limiting its market penetration and growth potential compared to competitors with broader coverage. Operational Challenges: The company faces operational challenges such as inventory management, delivery logistics, and maintaining product freshness, which can impact customer satisfaction and retention. Opportunities: Market Expansion: Blue Apron can explore opportunities to expand its market reach by targeting new customer segments, entering new geographic markets, and diversifying its product offerings. Partnerships and Collaborations: Collaborating with complementary businesses, such as grocery stores or food retailers, can enhance Blue Apron's distribution channels and brand visibility. Health and Wellness Trends: The growing trend toward health-conscious eating habits presents opportunities for Blue Apron to develop and promote nutritious meal options tailored to specific dietary needs. Threats: 7 Molla Tashrif Hossain, ID: 0428601

Intense Competition: Blue Apron faces intense competition from established players and new entrants in the meal-kit delivery industry, exerting pressure on pricing, market share, and customer acquisition. Changing Consumer Preferences: Shifts in consumer preferences, lifestyle patterns, and dining behaviors may impact demand for meal-kit delivery services, requiring Blue Apron to adapt its offerings and marketing strategies accordingly. Supply Chain Disruptions: Disruptions in the supply chain, including ingredient shortages, transportation delays, and natural disasters, can disrupt Blue Apron's operations and affect its ability to fulfill customer orders. IV. Strategy Formulation A. Strategic alternatives Diversification of Product Offerings: Blue Apron can expand its product line to include a wider range of meal options, such as specialized dietary plans (e.g., keto, vegan) and ready-to-eat meals. This strategy capitalizes on emerging health trends and caters to a broader customer base. Enhanced Geographic Expansion: The company can focus on expanding its geographic reach to untapped markets, both domestically and internationally. This involves strategic partnerships with local suppliers and logistics providers to ensure efficient delivery and distribution channels. Investment in Technology and Automation: Implementing advanced technology and automation in meal preparation and delivery processes can streamline operations, reduce costs, and enhance customer experiences. This includes leveraging data analytics for personalized recommendations and predictive ordering. B. Alternative evaluation Diversification of Product Offerings: Feasibility: Blue Apron has the culinary expertise and infrastructure to develop and introduce new meal options. Market Demand: Research indicates a growing demand for diverse and specialized meal plans. 8 Molla Tashrif Hossain, ID: 0428601

Cost Considerations: Initial investment in research and development may be required but could yield long-term benefits. Enhanced Geographic Expansion: Feasibility: Blue Apron has the resources to establish new distribution centers and partnerships in targeted regions. Market Potential: Expansion into new markets offers opportunities for revenue growth and market share capture. Regulatory Compliance: Compliance with local regulations and food safety standards is crucial for successful expansion. Investment in Technology and Automation: Feasibility: Blue Apron can leverage existing technological infrastructure and explore partnerships with tech companies. Operational Impact: Automation can improve efficiency in meal preparation, packaging, and delivery. Customer Acceptance: Adoption of technology-driven solutions should align with customer preferences and enhance user experience. C. Alternative choice Considering the feasibility and potential impact of each strategic alternative, Blue Apron should prioritize investment in technology and automation. This strategy aligns with the company's operational objectives, enhances efficiency, and addresses evolving customer needs. Additionally, it positions Blue Apron as an innovative leader in the meal-kit industry while laying the groundwork for sustainable growth and competitive advantage. V. Strategic Alternative Implementation A. Action items Cross-Functional Team Formation: Blue Apron should establish cross-functional teams comprising representatives from various departments, including marketing, operations, 9 Molla Tashrif Hossain, ID: 0428601

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technology, finance, and human resources, to facilitate collaboration and alignment throughout the implementation process. Strategic Goal Setting: Blue Apron should define clear, measurable, and time-bound strategic goals aligned with the organization's mission, vision, and core values. It must ensure that each goal is specific, measurable, achievable, relevant, and time-bound (SMART). Resource Allocation: Blue Apron should allocate resources, including financial, human, and technological assets, based on the prioritization of strategic initiatives. Ensure that resources are deployed effectively to support the implementation of strategic alternatives. Performance Metrics Development: Blue Apron should develop key performance indicators (KPIs) and performance targets to monitor progress and evaluate the success of strategic initiatives. Metrics should be aligned with strategic goals and provide actionable insights into performance. B. Action plan Timeline Development: Blue Apron should create a detailed timeline outlining the sequence of activities, milestones, and deadlines associated with the implementation of strategic alternatives. It must ensure that the timeline is realistic and allows sufficient time for each phase of the implementation process. Monitoring and Evaluation: Blue Apron should establish mechanisms for monitoring and evaluating progress throughout the implementation process. It must conduct regular reviews to assess performance against established goals and identify any deviations or areas requiring corrective action. Continuous Improvement: Blue Apron should foster a culture of continuous improvement by encouraging innovation, learning, and adaptation throughout the implementation process. It must solicit input from employees and stakeholders to identify opportunities for optimization and refinement. References Barney, J. B. & Hesterly, W. S., 2015. Strategic Management and Competitive Advantage: Concepts and Cases. s.l.:Pearson. 10 Molla Tashrif Hossain, ID: 0428601

Chen, T., Fenyo, K., Yang, S. & Zhang, J., 2018. Thinking inside the subscription box: New research on e-commerce consumers. McKinsey & Company, pp. 1-9. Ghemawat, P., 2007. Ghemawat, P. (2007). Red Ocean Traps: The Mental Models That Undermine Market-Creating Strategies. Harvard Business Review, 8(5), p. 68–77. Grant, R. M., 2019. Contemporary Strategy Analysis: Text and Cases Edition. s.l.:Wiley. Johnson, G., Whittington, R. & Scholes, K., 2019. Exploring Strategy: Text and Cases. s.l.:Pearson Education Limited. Porter, M. E., 2008. The five competitive forces tht shape strategy. s.l.:Harvard business review press. Volberda, H. et al., 2023. Strategic management: Competitiveness and globalization (concepts and cases). 14th ed. s.l.:Cengage Learning. 11 Molla Tashrif Hossain, ID: 0428601

Individual case 2 STG MGT

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