Fuala Chocolate Company: Management Strategy

Introduction

Industries apply different strategies to move forward in a competitive business world. These strategies differ not only based on time but also based on the strategic needs of the industry. Organizational success largely depends on these strategic tools, the excellence in execution of such strategies as well as proper designation of the management of a company. However, the purpose of this report is to discuss the management strategy of Fuala Chocolate Company, and to do so this paper will consider the mission and vision of Fuala, set goals for the prospect, design policies to attain those goals, implement strategic policies, control, and monitor the implementation process.

Company overview

In 2002, Fuala started its journey as a homemade chocolate manufacturer, offered chocolates with different tastes and flavors. From the very beginning, it is manufacturing chocolates along with love and care and hard labor. Fuala is ensuring the best quality of products through creativity in the manufacturing process and selecting the ingredients with the highest level of care. Its current business and corporate-level strategies are distinguishing its current products from the competitors, but it is not enough to ensure a strong future in the market. However, Fuala is committed to offering handmade chocolates with immense care to achieve the highest quality and to hold traditional taste.

Mission

“The mission is to provide the best quality chocolates, cookies, and other food products to the target customers along with traditional tastes and through gaining customer satisfaction, capturing the market share with the highest level of profit margin and finally to become the market leader. “

Vision

The vision of the company is to create such a friendly environment for the employees, which will motivate them to work for the best level and through this ensuring the highest production to capture the target market by meeting the customer demand. The way to gain customer satisfaction is to ensure the best product quality, improved and standardized showrooms, and by increasing the number of production lines.

External Environmental Analysis

Thompson and Gamble stated that it is essential to consider two useful tools to analyze the external environmental (45). These are the PESTEL analysis and porter’s five forces model –

PESTEL analysis of Food industry of UAE

Political factors

The political condition of the UAE is stable for many years and all the political forces ensure a business responsive environment for both local and multinational companies. Political violations, strikes, and other dilemmas are absent in the country, which encourages the emergence of the food industry. Political security is important for Fuala because the raw material collection, transportation, and distribution all these important things are related to political assurance. Apart from this, government initiatives are also very helpful for the new food companies. The democratic nurturing in UAE countries is taking new dimensions, which will be helpful for the food industry in near future.

Economic factors

The economy of the UAE has based on two basic products. One is oil and the other is gold. From very ancient times, these two most valuable minerals are driving the economic condition and for this, the economy of UAE has always experienced stability in nature. The recent economic downturn affected the economy but different economic movements are regaining from the recession. The key point of the UAE economy is dependent on oil and its availability, which is also helpful for the food industry. Oil is an important material used for the transportation and preservation of food ingredients.

Social factors

In UAE, different cultural groups have some differentiation in their food and eating habit. For this, almost all types of foods are available in UAE. Indian, Chinese, Italian, and many Arabic foods are popular along with the introduction of new western foods. Fuala is going to introduce food products ensuring the traditional tastes. For this reason, the food products of Fuala will create a new enthusiasm within the food lovers and its chocolates, coffee mates, cakes and cookies will add a new dimension to the demand of the customers. All the cultural groups love chocolates and cakes. As a result, the customers would positively accept the products of Fuala

Technological factors

All types of technologies are available in the UAE and industries are properly utilizing almost all technological inventions. The availability of technology has ensured the better quality of products and services. In the case of food manufacturing, there are few scopes to use technological benefits. However, certainly, some technological advancement has occurred in the case of food manufacturing which will facilitate the production of Fuala. Different types of machines and equipment are now available to prepare excellent chocolates, cookies, cakes, and coffee, which make the process easier. This technological advancement will bring the highest quality through which the highest level of customer satisfaction is possible.

Ecological factors

Like the most developed countries, environmental issues are getting more priority in UAE. There are many groups, who are concerning about environmental issues and pressurize the industries to produce less harmful products. Besides, the government rules and regulations are also prioritizing environmental welfare, which is also applicable for the food industries. The use of toxic materials and unhealthy ingredients are the key priority of ecological aspects in the case of food industries.

The ecological imbalance is changing the food habit of people and thus companies like Fuala must pay the highest-level attention to this issue. Again, to become an ecologically friendly company, Fuala can ensure the fulfillment of its corporate social responsibilities, which will bring a positive attitude.

Legal issues

The rules and regulations related to food manufacturing are a burning issue of now a day. There are some governmental and private bodies, which are closely monitoring the food quality whether it is harmful or not. These entities are pressurizing the quality control of the food products and through this to ensure the healthiness of the products.

Different standards have been established to measure the accuracy and purity of a food product, which is also shaping the food industry. The recent issues, like melamine in milk and many other problems, are making the people concern about the quality of foods which will have some impact on the production of Fuala.

Porter’s five forces analysis

  • Barriers to entry: The food industry has so many companies that it has now oversaturated in the aspects of production in UAE. Every day new shops and companies are opening and offering their products to the customer. However, barriers to entry into the market are still low which becomes possible only for the increasing number of food demands of people.
  • Bargaining power of Customer: Customers are the key issues of concern in the case of Fuala. It is designing its food products based on customer demands and customer satisfaction is its highest priority. So, in the case of Fuala the bargaining power of customers is high.
  • Bargaining power of suppliers: The success and earnings of a food manufacturing company is largely depending on the quality of food and the quality of food is depending on the quality of the raw materials. Besides, meet up the standards has also been done by the suppliers mostly. Therefore, the bargaining power of suppliers is also high.
  • Substitute products: There are different substitute products available in the case of food industries in the UAE. Different types of foods are available in the market, which means the highest level of differences among the foods. For this, customers have a chance to compare different products and consume those, which are acceptable in both price and quality. Consequently, the threat of substitute products is also high for Fuala chocolate
  • Competitive rivalry: There is decent competition existing among the food manufacturers of UAE. The companies are operating in the marketplace based on competition rather than termed it as a rivalry. PATCHI chocolate stores or Hail&Za’afaran Chocolate Stores are the main competitors of Fuala who are practicing good relationships in business.

Internal Analysis

The value chain analysis is a key tool used heavily to analyze the internal environment of a firm (Pearce and Robinson 160). There are two types of activities, which should be analyzed.

Primary Activities

  • Inbound logistics: The assets of Fuala should be enough to maintain the expenses for its regular operations. Activities like obtaining fuel, energy, raw materials, food ingredients, and other inputs are the inbound logistics, which will have to ensure availability. For the betterment of the production, inspection and inventory management is also a key issue.
  • Operations: The activities, assets, and costs associated with the conversion of inputs into outputs are the total operation process where different aspects are important. Production, assembly, packaging, equipment maintenance facilities, operations, quality assurance, and environmental protection are the key issues associated with the operation of Fuala.
  • Outbound logistics: These are the activities associated with the distribution of the products to the customers. Transporting the food products from the factory to the showrooms, storing the products in warehouses or the shops, getting an order from the customers, and delivering it all these issues are designing the outbound logistics of Fuala.
  • Marketing and sales: Marketing and sales are the issues related to selling the products to the consumers. It starts from the packaging of the products to the delivery of the final products to the customers. In this case, Fuala can use the advertisement with the help of different mass media to hold the customer’s attention.
  • Service: The in and after-sales service must be lucrative to attain customer satisfaction. In the case of showroom or shop service, the in-time service is very important which Fuala must monitor properly. The after-sales services may be discounts for next consumption or prize giving, contests, sweepstakes, and many more.

Secondary (supporting) activities

  • General administration: Fuala has to consider issues relating to the general management process like financing, accounting, legal and regulatory affairs, safety, and security of the employees, and many other issues;
  • Human resource management: Hiring employees, chefs and waiters are the key HRM-related issues for Fuala. The highest level of attention must pay to ensure the best quality human resource, doing on-the-job training and attractive compensation will bring competitive advantage.
  • Research and development: In the case of attaining appropriate information about customer demand, research and development is a major supportive task. By doing research Fuala would be able to know what its customers demanding and thus it will shape its products and offering in that way.
  • Procurement: To ensure the smooth operation of production, Fuala must acquire some other resources like infrastructures and technology, which are very sophisticated. Machinery and raw materials would ensure with the best quality so that the production will be swift and safe

SWOT analysis

SWOT analysis of Fuala.
Figure: SWOT analysis of Fuala.

Strength

  • Traditional taste
  • Brand awareness in UAE market;
  • the present customers are the strength of Fuala;
  • the quality of the products and services are also major strengths;
  • It has some uniqueness in producing chocolates and cakes, which is also giving it a strong position;
  • It concentrates on providing prompt friendly service in a clean, comfortable environment;
  • It has efficient, creative, and dynamic employees.

Weakness

  • Pricing and availability for all sorts of customers;
  • Less use of technology and lack in advertising program are jointly affecting the profit generation of Fuala;
  • It has no online purchasing system and lack of modern tools for promotional activities.

Opportunities

  • It has a great opportunity to have a good market share in UAE if it can ensure the best quality with reasonable price;
  • Besides, it is now expanding its business from the UAE to other Arab countries, which is giving it a multinational recognition and it has great opportunity to become a worldwide market leader in fast food industry;

Threat

  • Competitors like PATCHI chocolate stores or Hail&Za’afaran Chocolate Stores are the main threat;
  • Multinational competitors like Danisco
  • The present effect of global recession is also effecting the production of foods and increase of price of many food ingredients happened recently;
  • This is a great threat as paying more for raw materials will result in more pricing which will decrease the number of loyal customers finally.

Strategic Objectives

The strategic objectives of Fuala can be of two types. Firstly, it has a primary objective and secondly, it has secondary objectives, which are the outcome of the primary objectives.

  • Primary Objectives: It has aimed to capture the highest possible market share through earning the highest level of customer satisfaction ensuring the quality of the products and services.
  • Secondary Objectives:
    • Ensuring product offering without any harmful effects on the human body,
    • Maintain a good customer relationship, which will bring customer loyalty.
    • Design the total operation to attract the target customers.
    • Expand the operation globally so that people of other cultures and nations can have the opportunity to tastes the products

Generic Strategies

Pearce and Robinson argued that there are three types of generic strategies and these are cost-leadership, differentiation, and focus (195). Cost leadership means offering a low cost comparing to the offering of the customers. Differentiation means offering the products and services of a firm by doing some differentiation, which will differentiate the products from the competitors and will give some uniqueness. Focus is a strategy where the firm dos its operation focusing only on a small customer segment that has some similarities (Pearce and Robinson 195).

In this case, Fuala should adopt the differentiation strategy. The products offered by Fuala are somehow the same as the others. If it innovates any differentiation like the use of any new ingredients in the foods or creating different verities, it can make its products unique from others.

Grand Strategies

There are 15 Grand strategies. Fuala can take any of them or use a mixture of them. Firstly, Fuala can go for a market development, which is the marketing of existing products in a new market with only some cosmetic modification of the product where the target customers are in the related market. The Fuala add some new channels of distribution, differentiating the advertisements for different cultures, and modify the products in the scale of size, price, and taste (Pearce and Robinson 203).

Besides, it can also use the product development strategy where the modifications of existing products are not only cosmetic but also in a significant way. This substantial modification of existing products would be possible by the creation of a completely new product in the related product category. This strategy will help Fuala to get the attention of customers and finally trigger the purchase, which will result in a high-profit margin

Implementation and Control

To implement these strategies, Fuala would have to do certain tasks. Firstly, to make different products, it must keep the highest attention to innovation. Innovation of new product features which will reflect the customer desire can help the attainment of the success of the differentiation process. Secondly, to attain the market development strategy it must target such a market, which can easily be attainable where the marketing of its products are easy. Finally, to attain the product development strategy, Fuala must pay attention to the arrival of new features in the market.

Recommendation

  • Fuala should build a strong research and development department, which will help to get appropriate information related to the market;
  • It should increase the budget for promotional activities;
  • In case of expansion, Fuala should think globally rather than expand only in Arab nations as it has the experience to produce not only Arabian foods but also other foods;
  • As most of the customers of food products are price-sensitive, Fuala should fix the price of its products based on matching the customer desire along with its desire profit margin.

Conclusion

This report has considered the environment of the market, strengths, opportunities, threats, and weaknesses of the Fuala Chocolate Company to estimate the market position and to give suggestions as it has strong financial capabilities. Fuala has to give privilege to the needs of the local customers but it has the prospect to expand its business all over the world by providing franchisees in the international market.

Works Cited

Pearce, John, and Robinson Richard Braden. Strategic Management. London: McGraw-Hill, 2008. Print.

Thompson, John, and Gamble Strickland. Strategic Management. New Delhi: Tata McGraw- Hill, 2008. Print.

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NerdyRoo. (2021, December 19). Fuala Chocolate Company: Management Strategy. Retrieved from https://nerdyroo.com/fuala-chocolate-company-management-strategy/

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References

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