Arun Ice-Cream - Five Elements of Strategy

Business Strategy Assignment[pic 1][pic 2][pic 3][pic 4]

Arun Ice-cream                                  Five Elements of Strategy

Group no. 8

Group Members:

Five Elements of Strategy

As a group we have recommended that Mr. Chandramogan should go for Diversification i.e. he should do ‘Backward Integration’ by setting up Dairy farm where he can do milk production which he can use for ice-cream and other dairy products like paneer, ghee etc. During 1997 we assume that there might not be a lot of seller for selling ghee, cheese, paneer as people mostly will be producing in small quantity at home so Mr. Chandramogan can set up this Dairy farm. The major advantage will be Cost Reduction for making of Ice cream as milk is a major ingredient and if they themselves will have such farm they won’t have to pay extra to other suppliers and which will increase the profit margin and even will give additional revenues with sale of milk and other dairy products like cheese, clarified butter, flavoured milk, buttermilk with Ice cream. The major issue might be in the beginning i.e. set up cost for such farm will be high and they also will have to look after its packaging and with any changes there is always some risk associated.

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1. Arenas

• Product Categories:

By diversifying in the dairy business, Arun can procure milk for ice-creams and can also manufacture milk products which will help Mr. Chandramogan in increasing the revenue and acquiring his own market share in dairy industry.

For dairy business Arun can buy milk from villages and associate themselves with farmers of the villages.

The products which the company will produce now are:

1. Cheese
2. Flavored milk
3. Butter
4. Clarified Butter (Ghee)
5. Curd
6. Buttermilk

• Market Segments:

The new product line can be consumed by households of South India in urban and rural areas too with a growth of 25%.

• Geographic Areas:

They will be selling the new products in the existing market of Arun ice cream i.e.

Chennai, Tamil Nadu, Kerala, Karnataka, Andhra Pradesh, Pondicherry, etc. where his franchises existed

• Core technologies:

Required machinery for dairy farms

• Which value creation stages?

Quality assurance as Arun is producing its own milk and thus its own products are

Natural and are available in fresh and new flavors.

1. Vehicles

• Arun should focus on internal development for the dairy business. They already have 2 major plants in Chennai and Salem, which can be further expanded. Better utilization of resources of these plants,
• They will use their old network of ships, colleges and mess to supply their dairy products.
• As there are already many franchise for Arun ice cream the same can be used for selling their new products and even increase the no. of franchise by giving others an opportunity for business.
• They will collaborate with small milk farms and local co-operative dairy societies to get their supply of milk.

1. Differentiation

• They will create an image that the product is hygienic through its packaging and quality.
• Reasonable almost similar to competitors.
• Exclusive parlours for dairy products.
• Promotion through print media, TV advertisements, hoardings, radio, etc.
• Through attractive packaging of glass bottles, boxes, plastic used for packaging.
• The products will be easily available; will be hygienic.

1. Staging

• 3.5 - 4 years will be required for establishing the whole business and collaborating with small milk farms and increasing franchise for it.
• Sequence of initiatives are as follows:

• Step 1:

Understanding of the dairy industry and how would it be easy to manage it with the existing business. Find out all the necessary requirements to set up the new business. Understanding of the R&D of dairy industry

• Step 2:

Setting up the new technological equipments for dairy industry at the plants at Salem and Chennai. Collaborating with the nearby milk farms

• Step 3:

Start with the production of the dairy products in the plants. Come up with hygienic packaging.

• Step 4:

Devise and implement innovative promotional strategies.