Azalea Seafood Gumbo

Executive Summary

A thorough examination of Azalea Seafood Gumbo Shoppe was done to provide a strategic plan that will enable Azalea to maintain long-term growth and a sustainable competitive advantage. For Azalea to succeed, they need to consider valuable options presented in the following report. Included in the analysis is the following information that comprises the complete proposal:

• Analysis of the current market

• Analysis of forces that drive the industry

• Description of Azalea’s strengths and weaknesses

• An identification of the opportunities and threats that face Azalea Seafood Gumbo Shoppe

• Analysis and proposal of possible options for Azalea Seafood Gumbo Shoppe

Azalea Seafood Gumbo Shoppe and the Value-Added Seafood Industry

Azalea Seafood Gumbo Shoppe was established in Mobile, Alabama in 1971. The company changed hands once before Mike Rathle, John Addison, and Bill Sibley (who would soon sell his part of the company to Mike and John) took over ownership. Mike and John had to move the business due to lease issues and the since the new location was too isolated to support retail sales, they would have to focus on commercial accounts for future business. They now had a clear vision of where Azalea was headed. The facility enabled eight-ton-per-day production capacity. It wasn’t long before Azalea was producing more than 45 tons of gumbo and other seafood products each month. Their products were sold in many local restaurants, supermarkets such as Wal-Mart, and other types of food retailers.

Driving forces in the industry (Appendix C) are evolving as the Value-Added Seafood Industry begins to looks more and more profitable. Azalea has dealt well with their uncertainty and is well aware of the risks at hand. Azalea has to expand its production facilities in order to surmount production problems it faces inhibiting larger more profitable accounts. As they accumulate more accounts Azalea will begin to build a strong presence in the market. Once Azalea has reduced perceived risk levels and established itself financially, it needs to introduce new products in efforts to differentiate itself from the competition and increase its customer base. Once the industry begins to see long-term demand, competition will become a contest of who can capture growth opportunities and distance itself from the other competitors.

Porter’s Five-Forces Model of Competition (Appendix B) thoroughly exposes what the competition is like in the Value-Added Seafood Industry. The strongest of these forces is the competitive force of potential entry. Azalea has had great success with its gumbo, but because it only produces gumbo on a large scale, there are many unfulfilled niches left to pursue. If another company were to enter the industry with its own gumbo, it could be potentially devastating to Azalea if this gumbo was better tasting and competitively priced. This ties directly to pressures from substitute products. Azalea has to work aggressively to develop the revenue to be able to expand its product selection so that it can maintain and expand its customer base. As for the bargaining power of buyers, they have a considerable amount of leverage since their purchases are in such large quantities, and the difficulty of Azalea to sell to individual customers allows buyers to have even more bargaining power.

There are several key success factors (Appendix D) although some are more successful than others. Azalea having its product in over 1,100 supermarket has given it adequate exposure. It needs to keep customers happy through its accurate filling of buyer orders. Its attractive pricing has and taste has been a profitable KSF. They have a competitive advantage against other competitors with their gumbo because it mostly all they produce and they do it well. Most other companies have many other products to focus on rather than worry about trying to out compete Azalea simply in gumbo.

Upon studying the SWOT analysis (Appendix E) it is apparent that the strategy-making efforts must aim at producing a good fit between a company’s resource capability and its external situation. One internal strength is Azalea’s great-tasting award-winning recipes. Major weaknesses that the company faces are dependence on gumbo sales for the majority of its sales, loss of accounts due to poor quality control, and very low cash to fund future expansion and exploit new market opportunities. Opportunities include product line expansion and better product placement in stores where it is already on shelves. A few of the threats that the company faces