Company Background
Korean Bakery WLL is the largest industrial bakery in Qatar. It has the largest factory situation in the industrial area of Doha. The company produces all the traditional bakery products, along with decorating cakes and Arabic sweets. The company describes its history and values on its official website and LinkedIn pages of the principal actors (Korean Bakeries, no date).
Vision and Mission
The vision and mission statements of the company are openly available on the company’s official website (Korean Bakeries, no date). The statements demonstrate that the company is extremely customer-centric. Customer satisfaction is mentioned as a top priority both in the mission and in the vision statements. Korean Bakeries WLL sees delighted customers and consumer trust as the key to profitability today and in the future. Additionally, the company values its suppliers and employees.
Key Events
The company was established in 1983 and developed gradually until 1983. In 2010, Qatar was announced to be the host of FIFA World Cup 2022. As a result, the CEO of the company decided to expand to meet the anticipated growth in the need for food (Korean Bakeries, no date). Thus, a new high-capacity factory was purchased.
In 2017, a trade blockade against Qatar by the Arab Quartet had a significant impact on Qatar’s food industry, which made the company adapt to a new environment (Wellesley, 2019).
In 2022, the war in Ukraine began, which affected global supply chains. Moreover, FIFA World Cup is expected to take place in the summer of 2022, which will affect the demand for food products.
Problem Identification
The preliminary analysis revealed three central problems that the company faces and several crucial problems that need to address to ensure its financial stability.
First, the company operates in a highly unstable external environment. In particular, the war in Ukraine affected the political situation globally, which may lead to significant issues in the future.
Second, the war in Ukraine and the blockade of 2017 disrupted the company’s supply chain, as it is highly dependent on the imports of wheat.
Third, the company may experience a significant decline in demand in 2022 at the end of the World Cup, as many expatriate workers engaged in the building process associated with the World Cup will move out of the country.
External Analysis
PESTEL
The PESTEL analysis demonstrates political, economic, social, technological, environmental, and legal factors that may affect Korean Bakeries WLL. It should be mentioned that while the international political situation in the world and economic situation in the country is unstable, Qatar is still one of the best performances in terms of GDP per capita in the world (Simchi-Levi & Haren, 2022; Statista, 2022). Moreover, Korean Bakeries produce primary food products, which will be consumed regardless of the economic situation. However, the increased demand for healthy food may affect the demand for traditional bakery products.
Porter’s Five Forces
Porter’s Five Forces framework is a common technique used in strategic management (Amason, 2011). The threat of substitution is low, the threat of new entrants and competitive rivalry is medium, and the bargaining powers of suppliers and buyers are high. The analysis demonstrates that the company needs to manage its relationships with suppliers and buyers carefully to stay competitive. The company understands this, as it is reflected in the vision and mission statements.
Competitive Environment
Competitive analysis revealed that Korean Bakery is between Oligopoly and Monopolistic competition (Amason, 2011). On the one hand, there are numerous small companies, and the entry barriers are medium if a small bakery is to be open. However, when speaking of large-scale bakeries, such as Korean Bakeries WLL, there are only a few producers, and the entry barriers are high. The companies have some pricing power; however, they are largely dependent on the prices of the suppliers.
Internal Analysis
Resources, Capabilities, and Competencies
As was mentioned previously, the company’s central competency is the ability to understand the needs of customers and address them in time to keep customer satisfaction high.
Resources:
- The largest factory in Qatar;
- Advanced distribution network;
- Developed and trusted employees;
- Brand recognition.
Capabilities:
- Exquisite customer relations management;
- Effective supply chain management;
- Understanding of trends.
Competencies:
- Continuous improvement to meet the needs of customers and Qatar’s food requirements.
VRIO Analysis
VRIO analysis aims at answering the question if the company has a sustained competitive advantage (Amason, 2011). The analysis revealed that the company’s competencies are valuable; however, their rarity, inimitability, and organization are questionable. The major problem is that the company’s core competencies are not very costly to imitate. Thus, the sustainability of the company’s competitive advantage is questionable (Amason, 2011).
Valuable:
- Locally-produced fresh bread and other bakery products are valued by customers.
Rare:
- The resources are not rare; however, they are difficult to obtain, as negotiations with international suppliers are needed.
Inimitable:
- While the products and the business model are imitable, imitation is a costly endeavor.
Organized:
- The company exploits its capabilities effectively.
Value Chain Analysis
Value chain analysis is helpful for determining the primary activities. The primary concerns with the company’s value chain are the dependence on international suppliers and limited advertising campaigns.
Company Performance
The information on the company’s performance is scarce Korean Bakeries does not disclose any financial data. The availability of information on the competitors is also scarce. Korean Bakeries WLL has the largest market share among its competitors. The top five competitors include Yasmeen Sweets, Ummsaid Bakery, Wadia Group, MIDI SRL, and Valeo Foods, Group. (Mordor Intelligence, 2021).
Trends
The analysis of trends in the market revealed that the bakery market is expected to grow in the following five years (Mordor Intelligence, 2021). The growth of demand will be attributed to the increased demand for ready-to-eat products, as Qatari people’s life is becoming more hectic (Mordor Intelligence, 2021). Additionally, the company predicts that customers will demand more healthy options for baked goods, such as sugar-free bread and buns (Korean Bakeries, no date). Moreover, as the blockade decreases its influence, international players are becoming more interested in entering the Qatari bakery market.
Competitive Advantage
The analysis revealed that the company’s ability to compete in the market is associated with providing locally-made products, adequate pricing strategy, availability of healthy food options, excellent supply chain management, and outstanding customer and supplier relations.
However, the current competitive advantage cannot be called sustained as even though the combination of competencies is rare, it can be imitated at a medium cost. Thus, the competitive advantage is temporary (Amason, 2011).
Diagnosis
The results of the internal and external analyses revealed three major flaws. First, the company did not exploit the opportunity to grow its presence in social media. Second, the company’s advertising campaign does not include active online promotion. Finally, the company may experience a threat of instability in the supply chain due to dependence on international suppliers.
Solutions
Two solutions were identified to address the outlined problems and the reasons for them introduced.
The detailed implementation plans of changes will be introduced further.
Implementation Plan
Social Media Presence
Activities:
- Hiring a team of social media managers;
- Establishing the company’s pages on Facebook, Instagram, YouTube, and other social media channels;
- Setting up promotion campaigns using social media.
Time:
- The activities will take up to two months.
Financing:
- No significant investments are required;
- Activities will be funded using equity financing.
Outcomes:
- Established channels in the major social media sites in one month.
- Launched an online targeted advertisement campaign in two months.
- Increased brand awareness by 20% in six months.
A total of three activities were identified to achieve three goals. The plan is to be implemented within two months. No significant investments are needed. The company will need to pay the salary to the new members of the marketing team and invest in promotion campaigns for the products online.
Diversification of Supplier Base
Activities:
- Search for new suppliers within and outside Qatar;
- Signing new contracts with the suppliers;
- Establishing a new supply chain;
- Creating a risk management plan to address possible disruptions in the supply chain.
Time:
- The activities will take up to six months.
Financing:
- The company will pay only for the research, traveling, and negotiations, which is not a significant capital investment.
Outcomes:
- Increased the number of suppliers by 50% in six months;
- Created a contingency plan for any disruptions in the supply chain associated with external problems and threats.
The diversification of the supplier base is expected to take up to six months and include a total of four activities. These activities will help to have an increased number of suppliers and create a contingency plan for any disruptions in the supply chain associated with the instability of the external environment.
Sources
Amason, A. (2011) Strategic Management: From Theory to Practice. United States: Taylor & Francis.
Korean Bakeries (no date) About us.
Mordor Intelligence (2021) Qatar bakery product market – Growth, trends, covid-19 impact, and forecasts (2022 – 2027).
Shirey, M. R. (2013) ‘Lewin’s theory of planned change as a strategic resource’, JONA: The Journal of Nursing Administration, 43(2), pp. 69-72.
Simchi-Levi, D. and Haren, P. (2022) How the War in Ukraine Is Further Disrupting Global Supply Chains.
Statista (2022) GDP per capita (current US$) – Qatar. Web.
Wellesley, L. (2019) How Qatar’s Food System Has Adapted to the Blockade.